8.1 Introduction to Inventory Management
Inventory management plays a crucial role in industrial operations by overseeing the material resources that generate future revenue for an organization. This responsibility falls under the purview of the Operations Manager. Consider a retail store selling various products like packaged foods, groceries, apparel, and electronics. Typically, not all merchandise is stored within the store premises. A portion of the stock is kept in a warehouse facility. The combined inventory, comprising goods in the store and warehouse at any given time, constitutes the total inventory
This chapter will explore inventory management models that deal with certain or known demands. These models aim to address two fundamental questions:
- How many units to order
- When to place the order for those units
The primary objective of inventory control or inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonably low. Therefore, there is a trade-off between the amount of inventory held and the level of customer service provided.
“Inventory Management” from Introduction to Operations Management Copyright © by Hamid Faramarzi and Mary Drane is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.—Modifications: used section Introduction, some paragraphs rewritten; added additional explanations.
