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Inventory Control System On Three Products Of Three Supermarkets
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CHAPTER ONE
1.1 INTRODUCTION
Inventory control involves
provision for a flow of goods in and out of a business organization.
Inventory control improves the marketing system by checking
discrepancies and enabling effective planning. It is also applied to all
production activities. Therefore, inventory control is quite useful in a
marketing organization. It is very important to marketing process.
Considerable attention has been given in recent years to viewing
manufacturing facilities as production/inventory system. The framework
reorganizes the importance of inventory.
However, it sometimes
happens that the organization will find itself with more items in
inventory than that maximum that is to say with an excessive inventory.
The management of inventory systems typically involves keeping track of
thousands of stock keeping units. Since competitive and economic
advantages exist from efficient control of inventories, inventory
control models have been developed to assist inventory management.
Inventory
control system is based on recorded or theoretical (not actual) stock
levels to determine a set of parameters that optimize inventory control.
These parameters affect both operational and financial decisions. A
recorded stock level, is considered accurate when the recorded level
agrees with the actual stock level, otherwise there is an error.
Inaccurate inventory records may result in out-of-stock condition that
lower the service level and lead to loss of goodwill production time or
sales.
The main objective of inventory control is to maintain a
system which will minimize total cost and determine the optimum quantity
of commodity to order for and when best to make the order. The two
major systems are the “Re-order level system†and the periodic review
system.
Re-order level system: This is the most commonly used to set
quantity of stock for each item. This system which is more responsive to
fluctuations in demand compared with periodic review system sets the
value of three important level of stock as either check or trigger for
management. The three important level of stock are as follows:
i. Re-order level = Maximum usage (per period) x maximum lead time.
ii. Minimum Level (Lmin) = Re-order level - normal usage average lead time.
iii.
Maximum level (Lmax) = Re-order level + Economic order quantity (EOQ) –
(Minimum usage x minimum lead time) where EOQ is associated with cost
of ordering inventory.
Periodic Review system: This system sets a
review period for each stock item at the end of which the stock level of
the item is brought up to a predetermine value. The cost would be saved
and profit is increased, when many items are ordered at the same time
or in the same sequence. There is little or no chance of stock becoming
obsolete since it is reviewed periodically.
INVENTORY MODEL
Inventory
Model depends on the nature of the demand of that commodity. The demand
may be deterministic (known with certainty) or probabilistic (described
by probability density). Inventory model includes the following:
a. Single item static model (shortages not allowed)
b. Single item static model (Shortages allowed
c. Adapted model with gradual replenishment.
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ABSRACT - [ Total Page(s): 1 ]This research work entails the process involved in inventory control of three supermarkets on three products they sell. The supermarkets include Noble supermarket, Pick ‘n’ smile supermarket and Maris supermarket as a case study. We take their inventory on Candid Red Wine, So Klin Detergent (900g sachet) and Peak Milk Powder. In this research work, data for the observation were collected and analyzed using statistical inventory control models. The inventory models used here were Sin ... Continue reading---
