chapter  3
20 Pages

Chapter.3. Types.of.Inventory

Different Inventory Items Require Different Controls An important principle to keep in mind about inventory management is that different types of materials require different types of management and control. This may be an obvious statement, but there are companies that tend to control several types of inventory the same way. Then, they wonder why they are having a difficult time. For instance, a manufacturing company cannot possibly properly manage all inventory items for production using MRP alone. MRP stands for Materials Requirements Planning. It is a popular technique that is used to plan future requirements for components of end products. For many assembly and manufacturing firms, MRP is suitable for most items. Still, other inventory items they carry for their operation will not be suitable for MRP. Items that are purchased and resold off-the-self are not suited to the MRP technique, as are components of products that are engineered-to-order. In fact, depending on the nature of a company’s products, a different technique-not MRP-could be more suitable. Often, a combination of different techniques is needed.