Question

Company Inventory Levels

Why wouldn't a company always store large quantities of inventory to eliminate shortages and stock outs? Based on the company you have chosen or the firm that you work for, how do you rate its overall inventory levels? For example, is it lean, or is there extra waste in the system? Explain.

Answer 1

The company will not store large quantities of inventory to eliminate shortages and stock outs, the reasons provided below:

1. The customer demand will vary so storing large quantities of inventory will impact on the loss of the production.

2. Damages can occur which will leads towards higher storage cost and impact on the profit of the organization.

In my company they have used lean strategy which has been explained below:

Lean strategy can be defined as a way to minimize and eliminate waste during the production process. The sales occur when there is customer demand on the products. Focus on eliminating the waste and improved on production process. Root causes of the problems are identified through lean system.

The lean system can add value to the company as explained below:

1. The lean system improves on the quality of the production in the organization which impact on the growth and development.

2. The waste can be eliminated so that save the cost and time and focus on continuous business improvement.

3. Lean system always focuses on foster delivering of the products with its high flexibility which adds more value to the company.