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Principles of Inventory Management
MBA/550
September 02, 2006
Introduction
The purpose for this paper is to identify two principles of inventory management. An explanation on how inventory management affects a businesses cash conversion cycle and cost of goods will be covered. Next, supply chain components as they relate to the week four simulations will be discussed. Lastly, an explanation of the bottleneck theory will be given along with two solutions on how to resolve the bottleneck issue.
Inventory Management
Many companies who sell and provide merchandise for their customers more than likely house inventory. Inventory management is important for an organization to help with the order in which products are stocked, sold, maintained and reordered. The principles of inventory management are as follows. The two principles of inventory management to be discussed are simple and easy to follow. For example, one of the top priorities in inventory management is to maintain a clean, organized warehouse in which all items are properly stored and labeled. This is important for several reasons. First of all, cleanliness is important for you and your staff, as well as for any products you store. You don’t want the appearance of dust and dirt to have a client thinking that no one has purchased from you in a long time, and you certainly don’t want grime buildup to cause items to become damaged or ruined. Organized storage and labeling allows you to easily locate and order, pull, or stock any item in your warehouse without a long, difficult process (www.springer.com).
Keeping careful track of all of the items in your warehouse is ...