Inventory represents a major operating cost for virtually every type of business operation. Consequently, how it is managed has tremendous impact on the operation’s operating costs and ability to satisfy customer expectations. While we don’t typically think about it this way inventory management is something most of us have some experience with. For example, determining when to refill the gas tank of your car, and how much to buy when you do, is basically an inventory management process. Similarly, buying groceries, clothes, or any item that we have to periodically restock is basically an exercise in inventory management. Reflect on your approach to these activities and write a brief response to the following questions.
How good of an inventory manager are you? Do you carry a lot of inventory you don’t need? Do you put off replenishing things longer than you should? How much space is taken up by things you don’t need or use? How often do you have to throw things out because they are no longer useful or have spoiled? How often do you run out items that you do need?
Now think about how your approach to inventory management would play out in the following operations and discuss the impact it might have on their operating costs and ability to fulfill customer demand:
A hospital
A retail store
A manufacturing plant
While a software program like MRP might be a bit of overkill for you to use for your gas tank or grocery buying, discuss how it could benefit the above operations.