Inventory Management: Limitations, Originality of Methodologies and Conclusion

This article discusses the limitations of new inventory management models, the originality of methodologies used to gain information about inventory management in different organizations, and the significance of inventory management in supply chain management and productivity of companies.

Running head: INVENTORY MANAGEMENT
Inventory Management
Name of the Student
Name of the University
Author note

1
INVENTORY MANAGEMENT
Summary of Limitations:
The new inventory management models though time and cost variations, suffer from
certain limitations. The first limitation is that the new inventory model is derived from economic
order quantity which is based on fixed demand. This assumption is unrealistic because in reality
demand for commodities depend on the level of productivity at a given time. The models based
on retail chains are based on the inventory maintaining methods of retailers. This group of
methods suffers from the limitation that every retailer maintains stock of goods levels and
different rates of placing recorders. The models which are formulated on target optimal lead time
and inventory levels suffer from the shortcomings due to the fact that some organisations follow
variable lead times while others follow fixed lead times (Center, Alliance and Insurance 2016).
The models which are based mathematical algorithms are rendered ineffective due to variance of
supply chains followed by different organisations. Methods of managing inventory to secure cost
efficiency suffer from the defect of difference in firms to maintain replenishment rates. The
models which seek to maximise profits based on preferences of environment friendly customers
suffer from the shortcomings of limited number of firms and customers considering the
environmental sustainability important. Thus, it can be mentioned in this respect that though
environmental consciousness is rising among customers, that the population of this
environmental friendly customers is effective enough to be considered as a base of a model (Pan,
Shachat and Wei 2018). The model for food and nutrition services inventory management is sans
flaws since targeting a supply chain with closed loops can be efficient.
Originality of Methodologies:
The originality of the methodology used to gain information about inventory
management in different organisations shows that since the method of inventory control

2
INVENTORY MANAGEMENT
prevailing in industries vary according to several factors like the type of industry and business
the firms involve in. Hence, no one method is appropriate for inventory management and it
depends from one firm to another even within similar industries.
Conclusion:
It can be concluded that inventory management plays a very significant role in the supply
chains management and productivity of companies. The maintaining of inventory have profound
impact on the business efficiency of the organisations and their overall business management.
This is because if organisations maintain immense amount of inventory, it impacts their liquidity
negative since a large amount of money goes towards acquisition of the stock of raw materials.
Similarly, retail businesses which sell finished goods also stress on selling their stock of finished
goods because this releases the cash locked in the inventory. Similarly, firms inventory is
intricately related to supply chain management. This is because a smooth inventory management
enabled companies to manage their supply chains effectively. Moreover, by using inventories of
raw materials and selling the inventories of raw materials, the firms are able to release to the
m,oney locked in the inventory and the cost of warehousing them. The money released due to
process and sell of inventory can be reinvested in the business operations. Thus, inventory
management plays a significant role in the operations of firms.

3
INVENTORY MANAGEMENT
References:
Feng, M., Li, C., McVay, S.E. and Skaife, H., 2014. Does ineffective internal control over
financial reporting affect a firm's operations? Evidence from firms' inventory management. The
Accounting Review, 90(2), pp.529-557.
Center, P., Alliance, A.M.A. and Insurance, A.M.A., 2016. Practice Management. Safety.
Pan, J., Shachat, J. and Wei, S., 2018. Cognitive stress and learning Economic Order Quantity
(EOQ) inventory management: An experimental investigation.
Bahrom, M.Z., Roslin, E.N., Razak, S.N.A. and Rahman, M.A.A., 2015. A Conceptual Model of
Inventory Management System using an EOQ Technique–A Case Study in Automotive Service
Industry.
Kazemi, N., Shekarian, E., Cárdenas-Barrón, L.E. and Olugu, E.U., 2015. Incorporating human
learning into a fuzzy EOQ inventory model with backorders. Computers & Industrial
Engineering, 87, pp.540-542.