Chapter 12: Inventory Management

All organizations hold stocks. These are the goods they acquire and put into storage until needed. The amount of stock varies enormously, but a typical organization holds about 20% of its annual turnover. This is a major investment, which managers want to organize as efficiently as possible. Unfortunately, this is more difficult than it seems. A huge amount of work has been done to develop the principles of effective inventory control, but it is still difficult to identify the best policies. There is no ideal way of organizing stocks, and the best options depend on the type of operations, constraints, objectives, and a whole range of subjective factors. In spite of this, there is a clear trend towards lower stocks. New methods allow organizations to move goods quickly through the supply chain, working with far less stock to achieve the same levels of customer service. This chapter describes the most important work in the area.