I. INTRODUCTION
Inventory management is an extremely important function to any business, since
inadequacies in control can result in serious problems. If inventories are managed in
an inefficient manner, it is likely that delays in production, dissatisfied customers, or
curtailment of working capital will result.
The American Production and Inventory Control Society (APICS), defines Inventory
Control as [1]:
"A generic term embracing all the techniques employed in maintaining inventories
. . . at predetermined levels consistent with planned production schedules and
forecasted sales requirements."
Functionally, it is the management of materials for customer satisfaction and
profitability, while maintaining a minimum inventory investment, with maximum
facility and manpower utilisation.
During the economic recession of recent years, many companies have regretted
the large amounts of capital which have been invested in inventories. Not only has
this required management to improve its knowledge on inventories, but also how its
decisions have affected other departments and the company's objectives as a whole.
The aim will be to provide management and operators who have direct responsibility
for inventory, with guidance which should lead to improved effectiveness. As such
the monograph complements an earlier publication[2] of this journal which sought
to appraise management in general of the role of inventory in business.
As with most aspects of business activity inventory may be viewed both at the
strategic and operational levels. Examples of the forms of decisions include the extent
to which stocks of finished goods will be held, customer service policy, and the
location of inventories. Decisions of this type will have operational implications
and are reflected ultimately in the control of individual items.
Some reference will be made in this monograph to strategic issues but the main
concern will be the practical aspects of inventory control. The emphasis will be on the
uses and limitations of formulae rather than their derivation.