Business Management - Operations management: inventory management
Inventory management techniques
* Materials requirement planning. Image.
A more complicated inventory problem occurs with dependent demand
inventory, The most common inventory control system used for handling
dependent inventory is materials requirement planning (MRP). MRP is
dependent demand inventory planning and involves the implementation of a
control system that schedules the exact amount of all materials required to
support the desired end product. MRP is computer based and requires
sophisticated calculations to coordinate information on inventory location,
bills of materials (a listing of all components including partially
assembled pieces and basic parts that make up an end product), purchasing,
production planning, invoicing, and order entry specified in the master
schedule. Inventory levels are based on past consumption and are aimed at
reducing inventory costs and keeping the production line supplied with the
materials necessary to keep it running smoothly.
* Manufacturing planning and control. Image.
Manufacturing planning and control (MPC) systems enable the firm to move
materials through the operation and schedule so that the company satisfies
customer needs at a minimal cost eg MRP II and JIT.
MRP II - a technique for managing inventory; it is a computer-based
information system that integrates the production planning and control
activities of basic MRP systems with related financial, accounting,
personnel, engineering and marketing information.
* Just-in-time. Image.
Just-in-time (JIT) inventory planning is a system designed to reduce the
level of an organisation's inventory to zero. Sometimes these systems are
referred to as stockless systems or zero inventory systems.
JIT is called a demand-pull system because each workstation produces its
product only when the next workstation says it is ready to receive more
input. This is in contrast to the traditional batch-push system, in which
parts are made in large, supposedly efficient batches and pushed to the
next operation on a fixed schedule, where they sit until used.
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