STOCK CONTROL SYSTEM

Simulation of the Stock Control System for Printer Cartridges

Simulation of the Stock Control System for Printer Cartridges

Introduction

The paper attempts to discuss the concept of simulation in stock control system in a holistic context. It provides an insight of the stock control system as a concept used by various organizations to manage their inventories. The paper also focuses on a particular case study of an organization and analyzes the current stock control system employed at the organization. It also presents a more efficient stock control system and provides a comparison between the two stock control systems.

Discussion

A stock control system is a system used by organizations to keep a track of their inventory as well as manage the frequency and size of orders they place to replenish their inventory levels (Boukas & Malhame, 2005). This is an important and integral part of organizational operations especially for organizations that are operating with the nature of trading business (Axsater, 2006).

There are several reasons for a company to maintain supplies and finished goods inventory. The inventory can cope with fluctuations in demand, avoid stock breakdowns, achieve economies of scale, allows for greater production flexibility, can be used as a competitive weapon, and so on (Boukas & Malhame, 2005). So if you maintain inventory has important benefits associated Why not fill our warehouses inventory?. The answers are varied, but all maintain a common basis: Costs. States that maintain inventories is a "necessary evil" given the costs associated with inventory management (Toomey, 2000). In this sense we can classify the inventory costs:

Orders Cost: cost incurred each time an order is issued.

Cost of maintaining inventory: warehouses lease, depreciation, opportunity cost, losses, insurance, etc..

Cost breakdown of stock: it is more difficult to estimate and is associated with the cost of selling loss (losing a client, image deterioration, fines, etc) (Boukas & Malhame, 2005).

The Operations Management provides mathematical models which can cope with in a systematic way the problems of inventory management (Muller, 2011). These mathematical models basically fall into 2 categories and depend on the behavior (based on assumptions) about the behavior of demand. Models are associated with constant demand (EOQ, POQ, EOQ with quantity discounts, etc.) and those associated with random demand (associated with a probability function) (Toomey, 2000).

Concept of EOQ

In determining the lot used in procurement logistics indicator of optimal (economic) size of the order. This indicator expresses the power of the material flow directed to the supplier and the customer's order for the latter providing the minimum value of the sum of two components of the logistics: transport and harvesting costs and the formation and storage of supplies (Muller, 2011).

Determining the size of the order, it is necessary to compare the cost of maintaining inventory and cost of delivery of orders. Since the average volume of stocks is equal to half the size of the order, order consolidation of the party will increase the average volume of stocks (Toomey, 2000). On the other hand, the purchases are made in large quantities, the ...