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Inventory management - Why should there be any inventory

4 important questions on Inventory management - Why should there be any inventory

What is the task of operations management in inventory?

to allow inventory to accumulate only when its benefits outweigh its disadvantages. The following are some of the benefits of inventory.

What are the benefits of inventory?

1) physical inventory is an insurance against uncertainty
2) physical inventory can counteract the lack of flexibility
3) physical inventory allows operations to take advantage in short term opportunities.

What three major types of decisions are operations managers involved with?

● How much to order. Every time a replenishment order is placed, how big should it be (some- times called the volume decision)?

● When to order. At what point in time, or at what level of stock, should the replenishment order be placed (sometimes called the timing decision)

● How to control the system. What procedures and routines should be installed to help make these decisions? Should different priorities be allocated to different stock items? How should stock information be stored?