Question

What is also an ideal response to this discussion?

In order to have an effective inventory management system, an organization needs to start off with a good system that can keep track of inventory on hand and on order. One must first know what they have. Something like a universal product code (UPS), which is a bar code printed on all labels and contains information about the item, helps keep track of inventory and gives all managers needed information. It's important for managers to have a reasonable estimates of inventory holding costs, ordering costs and shortage costs. Lastly, it's important to have a classification system for inventory items. Something like an A-B-C approach is helpful because it classifies inventory according to measures of importance. The four basic costs associated with inventory is purchasing, holding, ordering and shortage costs. Purchasing cost is the amount paid in order to have the inventory in the first place. The tends the be the largest cost. The holding cost refers to the shortage of the goods. The ordering cost is the costs or ordering and receiving inventory. Lastly, the shortage cost is the result when demand exceeds the supply of inventory on hand. This can include the opportunity cost of not making a specific sale, late charges, and backorder costs.

Answer 1

The discussion is related to inventory management. It includes the basics of inventory management, why it is needed, how it is done and what are the costs associated with inventory. The ideal response to this discussion would be to how well can the inventory be managed with such systems and if there is any better way to manage the inventory, How technology can be used to reduce the costs associated with inventory. How to order booking and order delivery can be done more effectively. What kind of lean principles can be used to improve inventory management? Every process can be improved continuously and discussion on this should be ideal response and so can inventory management.