This text provides informative, short introductions to the core concepts of Operations Management. This text contains more than 50 concept entries and is fully cross-referenced.An outstanding reference for Operations Management students at all levels. 

Inventory Systems

Inventory systems

Inventory management systems are sets of policies, processes, and controls that monitor levels of inventory within an organisation and determine how much inventory a firm should order and when.

Inventory Management Systems

An inventory management system is the result of a number of decisions, as shown in Figure 40. Each decisional parameter (in rounded rectangles) and decision (rectangles) is discussed in the following sections. The decision objective is to target a specified level of inventory management performance. Examples of possible performance targets are:

Figure 40 A decision model of inventory management

  • To avoid excess inventory, specified as a maximum stock level, or as a percentage of sales.
  • To avoid low inventory levels and especially stockouts. Policies that specify minimum inventory levels are often known as service level specifications.
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