Inventory Optimization in Efficient Supply Chain Management

INVENTORY OPTIMIZATION IN EFFICIENT SUPPLY CHAIN MANAGEMENT
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Supply chain management.
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INVENTORY OPTIMIZATION IN EFFICIENT SUPPLY CHAIN MANAGEMENT
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Executive summary.
This report paper explains the relevancy of inventory optimization in effect supply chain
management, and it has the introduction, background that give conceptual information about
supply chain and inventory man agent. It also contains definitions of terms used in the report,
characteristics and examples of applied inventory optimization, and it further describes the
importance of inventory optimization, and how it interacts and facilitates supply chain. This
paper also discusses the implication of inventory optimization and future directions and finally
concludes.

INVENTORY OPTIMIZATION IN EFFICIENT SUPPLY CHAIN MANAGEMENT
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Table of contents.
Contents
Executive summary.................................................................................................... 2
Introduction.................................................................................................................... 4
Background conceptual information...................................................................................... 4
Definition of terms........................................................................................................... 5
Characteristics................................................................................................................. 5
Example of inventory optimization....................................................................................... 6
Importance of inventory optimization in effective supply chain management...................................6
How inventory optimization interacts and facilitates supply chain.................................................7
Implications of inventory optimization in effective supply chain management..................................8
The future direction of inventory optimization for efficient supply chain management in organizations.. .8
Conclusion................................................................................................................... 10
References................................................................................................................... 12

INVENTORY OPTIMIZATION IN EFFICIENT SUPPLY CHAIN MANAGEMENT
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Introduction.
Most organizations have various departments, one of them being is the supply chain
department. It involves purchasing raw materials and managing the inventory. For an
organization to be profitable, it has to meet the customer's demand in good time. However, they
have to make sure that there are no high levels of inventory in the warehouses to reduce the
storage cost. Inventory optimization helps balance the demand and supply; it gives an
organization a competitive advantage, and thus, it is crucial for all organizations. This report will
discuss more on inventory optimization, and it will provide background information, define some
terms, characteristics, and examples of inventory optimization, the importance of inventory
optimization, and how it interacts and facilitates supply chain and implications and future
direction (Keizer, Teunter and Veldman 2017).
Background conceptual information.
Competition has become too much in today's market, to remain competitive,
organizations have to reduce the cost of production, improve their customer services and quality
of their product. They can manage this in the procurement department and the marketing
department, where they all work independently, but they all aim to achieve the same goal (Peters
et al. 2016). However, the conflict in terms of the objectives. The marketing department focuses
on increasing the number of sales and practicing economies of scale thus producing so many
products at a reduced cost without considering an increase of inventory level while the
procurement focuses on minimizing the overall cost of products (Gupta and Anukriti 2018).
Supply chain focuses in managing raw-materials and communication through the whole
chain of suppliers, distributors, and customers, recently it has been discovered that actions of one