Wednesday, August 6, 2008

Inventory control based on demand

In the decline stage, cash management, inventory control, and abandonment timing become critical.
Understanding this life cycle can help managers select logistical tactics, inventory levels and supply chain designs. The ultimate goal for companies should be to have just enough inventory to satisfy consumer demand.
High levels of inventory must be held to meet even minimal customer service levels.
Inventory levels are affected by customer service expectations, demand uncertainty, and the flexibility of the supply chain. Consumers are demanding more customer service from firms throughout the supply chain.Firms who understand their demand recognize stockout costs and carry appropriate levels of inventory are ultimately better able to effectively manage inventory and provide the desired service level to customers.

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