ABSTRACT
This chapter focuses on the techniques needed to control levels of inventory. Key elements are discussed in more detail as a guideline for developing an effective inventory management program. There are three basic areas necessary for managing inventory: monitoring quantities, materials purchasing, and protection against loss. In addition, the turnover of inventory will also play a major role as measured by the inventory turnover ratio. A materials purchasing program is a major factor in controlling total inventory. A company should discourage loss to protect the value of its inventory and, ultimately, profits and cash flow. Just-in-time inventory is a management system that is part of a manufacturing approach that estimates how much inventory is necessary to keep the production line running efficiently. Production order quantity model, unlike the economic order quantity model, assumes that inventory flows in a continuous manner or that inventory accumulates over a period of time.
