Understanding the Concept of Inventory Management

Introduction3

Discussion3

1. Overview of Eriska Hotel5

1.1.Inventory Management system at Eriska Hotel5

1.2.Problems in inventory management6

1.3.Appropriateness of inventory management strategy6

1.4.Proposed Recommendation7

2) Amazon.com7

2.1 Inventory Management system at Amazon.com8

2.2. Problems in inventory management of Amazon8

2.3. Appropriateness of inventory management strategy9

2.4. Suggeste Recommendation9

Conclusion9

References10

Understanding the Concept of Inventory Management

Introduction

It is important to know what inventory management means before getting into its details. Inventory management, as the name suggests is the control of the inventory, which let the management of sales, purchase, and payment play their roles in maintaining the inventory. Mostly organizations have the software of inventory management, which not only helps in maintaining the invoices, purchase orders, etc, but it also helps in creating the invoices, receiving lists, purchase orders, bar codes, etc. The inventory management controls the operating costs, and it provides a better understanding of the movement of the inventory (Waters, D., (2007)). The information regarding inventory got maintained through the inventory management software, which is important for all organizations to know as it is the main source of doing their business. The inventory management software system helps in creating the revenue for the company. Thus, it can be said that the management of inventory is very essential for the organization, in order to run a smooth and uninterrupted business. Inventory management is a very crucial part of management of a business because companies generally incur a huge amount of money on the management of inventory (Axsater, S., (2007)).

Discussion

Inventories are the stored material, either that is waiting to be processed or in face of final good. In simple words the output or the raw material of the company are known as the inventory. Although inventories are the assets of the company but still many managers don't like inventory because either the stored inventory or those waiting to be processed, increase the cost of the company (Saxena, R., (2009)). In the last fifteen to twenty years there has been a spate of programs developed by industry, all with the purpose of inventory cost and inventory levels and increasing the efficiency. In this detailed discussion of assignment we are supposed to evaluate the system of inventory management in two organizations; the organization that we have selected for our assignment are 1) Eriska Hotel 2) Amazon.com

Problems Faced by the Organization while managing their Inventory

Problems that are faced an organization or the company regarding what amount should be ordered every time in order to meet the demand of the costumer is known as the inventory control problems. It is never easy to predict or calculate the exact or even somewhat equal to exact calculation of the demand. That is why company either faces the problem of deficiency of inventory or an excess of inventory at some point in time. But still there are still some mathematical techniques like dynamic programming, network optimization and optimal control to model this problem of inventory.

Second issue is linked with the product demand change either predictable or ...