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Essay / Research Paper Abstract
This 20 page paper is an examination of the Economic Order Quantity (EOQ) system of inventory control. This system seeks to optimize the use of resources by deterring the most appropriate levels of stock ordering to minimise holding and order costs. The paper considers why this is a good system of stock control, how it works, whether it works with or contradicts just in time (JIT) inventory management and gives an example of its use. The bibliography cites 8 sources.
Page Count:
20 pages (~225 words per page)
File: TS14_TEEOQinv.rtf
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Unformatted sample text from the term paper:
REFERENCES 24 Figure 1 Inventory Movement in the Manufacturing process 4 Figure 2 Inventory holding pattern. 9 Figure 3 Finding the EOQ 12 Figure 4 EOQ Example 19 1. Introduction
For any manufacturing company the management of inventory is of paramount importance. A number of methodologies for inventory management have been utilised by a range of companies, such as just
in time and pull methodologies. These are the processes of inventory management which are gaining the highest level of attention. However, due to the low levels of stock held and
the associated risk with these systems, especially where there are inputs that are time sensitive, have to be delivered in bulk or for some reason cannot be coordinated in such
a high trust manner, these are not systems which are best suited. This does not mean companies should not seek to minimise the level of stock held t reduce the
costs of holding and level of capital tied up in the stock, or that there is less attention paid to the way stock is managed. One method that has received
less attention, but may be more suited to many manufacturing industries is the Economic Order Quantity (EOQ) method. By identifying the most appropriate inventory management control system a company
can increase efficiently and maximise the use of resources. The level of savings with efficient management of inventory is potentially very high. The focus for increasing efficiencies has been on
lowing costs that are not immediately productive and also has inherent opportunity costs (Nellis and Parker, 2000), such as working capital and capital tied upon inventory. However, despite this attention,
the level of goods tied up in warehouses and held as inventory is increasing (Putzger, 2005). In 2004 it was estimated that US businesses had about $1.63 billion in inventories,
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