The inventory management systems of a production unit and some academic institutions: a comparative study

Abstract

While inventories are necessary to absorb input and demand variations, a balance is needed between blocked capital in the inventories and the impact on production. The rising costs and risks of carrying various types of inventories have focused attention on their proper management and control. Because substantial funds can be at stake, purchasing bears a vital, continuing responsibility for managing inventories prudently. In recent years, significantly improved computer capabilities have enabled companies to cope better with the uncertainties associated with inventories and to reduce inventory costs by setting more efficient inventory levels. In the service industry (academic institutions), where the requirements are more in terms of higher levels of customer satisfaction, the Inventory Management (IM) system should be designed in such a way that it would provide higher customer satisfaction. As some of the systems may not require substantial stores to be warehoused, the best ordering and procurement policies may be at variance with respect to the traditional inventory control system prevailing in the production/manufacturing industry. In this paper I will discuss IM system followed in a production industry and two academic institutions. This study addresses the overall IM system followed in these organisations. The study focuses on understanding and analysing the current inventory system that they are practising. Further, a set of recommendations to improve the system are made.