Comprehensive Report on Inventory Management Strategies and Systems

This report provides a comprehensive overview of inventory management. It begins with an analysis of inventory practices, evaluating the implications of holding high or low inventory levels for different part types, and emphasizing the importance of optimizing inventory levels based on value, lead times, and quality considerations. The report then delves into ABC analysis, categorizing inventory items based on their value and consumption rates (A, B, and C items) and proposes integrated inventory control policies tailored to each category. Furthermore, it identifies the essential information required for effective inventory management, including inventory forecast analytics, real-time data, customer data, and historical data. The report concludes by recommending specific software systems, such as Fishbowl Inventory and Zoho Inventory, comparing their advantages and disadvantages to aid in selecting the most suitable inventory management solution. References are also included to support the analysis.

Running head: INVENTORY MANAGEMENT
Inventory management
Name of the student
Name of the university
Student ID
Author note

1INVENTORY MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Answer (1).......................................................................................................................................2
Answer (2).......................................................................................................................................4
Answer (3).......................................................................................................................................5
Answer (4).......................................................................................................................................5
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

2INVENTORY MANAGEMENT
Introduction
Inventory management involves supervision of the non-capitalized assets and the stock
items. Implementation of effective integrated inventory control policy involves understanding of
the basic management process for inventories in addition to disciplined and effective application
for associated practices1.
Answer (1)
Analyzing the above table it can be stated that –
 As part number 1236 is of high value, keeping nearly half year’s inventory is bad
practice. It will be resulted into huge value for the inventory carrying cost and eventually
1 Wild, Tony. Best practice in inventory management. Routledge, 2017.

3INVENTORY MANAGEMENT
big capital amount will be tied up under inventory. Hence, the good practice will be for
such item is to maintain low inventory level2.
 Part number 1241 is of low value and has large lead times along with bad delivery
history. As per the present practice of the company, very small inventory is maintained
for this item that is not good. It will result into high cost for ordering in case of urgent
demand and frequent event of stock outs. Hence, the management shall keep high
inventory level for such item.
 Part number 1246 is of low value and has large number of quality issues. Present practice
of the entity is to keep very small inventory for this item that is not good. It will lead to
high backordering cost and stock outs. Hence, the management shall keep high inventory
level for such item. Further, it will help the company to keep running the production in
case of the batch rejection3.
Creation of Chart for ABC analysis
ABC analysis segregates the inventories into 3 categories – A, B and C. Item A are the
goods that composed of highest value with regard to annual consumption. B items have medium
value for consumption. It comprise of 70% - 80% of total consumption value for inventories.
Item B has medium value for consumption and comprise of 15% - 20% of total consumption
value for inventories. On the other hand, item C has lowest value for consumption and it
accounts for lower than 5% of total consumption value for inventories4
2 Muller, Max. Essentials of inventory management. HarperCollins Leadership, 2019.
3 Gallino, Santiago, Antonio Moreno, and Ioannis Stamatopoulos. "Channel integration, sales dispersion, and
inventory management." Management Science 63.9 (2016): 2813-2831.
4 Disney, Stephen M., et al. "Inventory management for stochastic lead times with order crossovers." European
Journal of Operational Research 248.2 (2016): 473-486.

4INVENTORY MANAGEMENT
79.80%
20.09%
0.10%
Item chart
A
B
C
(Figure: Pie chart for ABC analysis)
From the above chart it can be stated that item A accounts for 79.80%, item B accounts
for 20.09% and item C accounts for 0.10%.
Answer (2)
Integrated inventory control policy
With good knowledge of underlying principles those are involved and common sense
approach for implementing healthy practice, the management will be able to take prudent
decisions regarding managing the inventories. Main objective of ABC analysis is applying
different management policies for every product under the inventory. It is quite obvious that the
most common and lowest value C items will not be treated in the same way as the highest value
A items5. Hence, the integrated inventory control policies for different categories of items are as
follows –
 A-items shall be controlled tightly with the frequent audits for inventory for assuring that
everything associated with inventory is smoothly running. Further, these inventories shall
be stored in most secure way and at the conditioned place for preserving the integrity and
numbers. Running out for stock under A-items may have huge adverse impact on the
5 Mamani, Hamed, Shima Nassiri, and Michael R. Wagner. "Closed-form solutions for robust inventory
management." Management Science 63.5 (2016): 1625-1643.

5INVENTORY MANAGEMENT
business so that the situation can be avoided at any cost. Hence, the stock levels shall be
monitored closely and the same shall be re-ordered well ahead of the time for preventing
the setbacks, if any. Modern inventory control app or inventory management system can
manage this automatically. Further, the forecasting for A-items shall be accurate to the
extent possible and therefore, reliable sales app shall be used for the same purpose6.
 C-items do not require close monitoring. The management shall consider C –items under
inventories and as they account for the lower sales volume, overstocking risk is higher
that may lead to loss of money. Hence, instead the management shall always under stock
the C-items and re-order the same, when required as the sales for C-items are not so
critical.
 B-items fall in between A-items and C-items. B-items shall be monitored as they may act
as potential evolution for the A-items that will take place in early stages of product that is
the lifecycle, and to the C-items close to the end of life cycle7.
Answer (3)
Information required for effective inventory control policy
Essential information for effective inventory management are as follows –
 Inventory forecast analytics – Understanding the level of customer demand and the
patterns is one of the toughest things for the inventory managers. Without specialized
system for forecasting and set of the practices, forecasting for sales may become the
guesswork that may costs the business money and time. The solution here is using the
professional forecast analytics including planning and inventory analysis app based on
statistical and mathematical procedures8.
6 Mamani, Hamed, Shima Nassiri, and Michael R. Wagner. "Closed-form solutions for robust inventory
management." Management Science 63.5 (2016): 1625-1643.
7 Mamani, Hamed, Shima Nassiri, and Michael R. Wagner. "Closed-form solutions for robust inventory
management." Management Science 63.5 (2016): 1625-1643.
8 Balcik, Burcu, Cem Deniz Caglar Bozkir, and O. Erhun Kundakcioglu. "A literature review on inventory
management in humanitarian supply chains." Surveys in Operations Research and Management Science 21.2
(2016): 101-116.

6INVENTORY MANAGEMENT
 Real – time data – for better inventory management the management requires charting
for the daily activities as lot of time is lost for sharing information among the
departments and employees.
 Customer data – if the entity offers their product through on-line, in-store and globally,
demand for each of the customers types vary. Hence, the entity requires software
solutions for generating warehouse capable for handling the orders for unique
customers. This information is required for effective inventory control management.
 Historical data – for implementing any new solution, the entities shall dump the old
systems. Hence, for optimization of new system historical data is required9.
Answer (4)
Recommendation of software system
Fishbowl inventory manufacturing software – it is the hybrid manufacturing and the
warehouse management solution for the mid-size and small entities. The software was developed
by Chuck and Beverly Hale, 2 business owners from Salt Lake City in the year 2001. The
software won various business awards for revenue growth from various organizations. Major
features of the software include material requirement planning, inventory control, management
for work order, and bill of materials and manufacturers orders. User licenses for the software is
concurrent and of non-expiring nature. It starts at $ 4,395 that provides permanent ownership for
the software. Further, the software becomes more cost-efficient with addition of more
members10.
Advantages and disadvantages of Fishbowl inventory manufacturing software
Advantages – it is flexible software that is comprised of advanced features for meeting the
complex requirements. Other advantages of this software are –
 Recognize and eliminate the inefficiencies in the production line
 Use the automated work orders for maintaining optimal level for the finished goods
 Track the product locations and the amounts for assuring exact inventory count
9 Tirinato, Jody Ann, et al. "Point-of-care inventory management system and method." U.S. Patent Application No.
10/024,734.
10 Castillo, Andrea Kristel M. Automated Inventory System Of Lg Arambulo Enterprises. Diss. University of Asia
and the Pacific, 2017.

7INVENTORY MANAGEMENT
 Reduce the requirement of workforce through empowering the workers for doing more in
the less time.
Disadvantages – main issue with Fishbowl is update. Whenever there is any change, the fishbowl
client download entire list for everything including parts, orders and products from the server.
On the limited bandwidth link is the major annoyance. If system only updates records that have
been actually changed performance will automatically improve11.
On the other hand, if the advantages and disadvantages of other app is compared it is found that
–
Zoho Inventory software has the following advantages and disadvantages –
Advantages –
 User-friendly and loads the page quickly
 Comfortable easy and smart
Disadvantages –
 Lack for the bill of materials. As the trading and manufacturing company is is extremely
difficult to increase the stock without the bill of materials
 Price of the product is exceptionally high12.
Dear inventory software has the following advantages and disadvantages –
Advantages –
 It can be accessed from anywhere
 It is very much intuitive for using with detailed feature, excellent support of customers
and response to suggestions.
Disadvantages –
 Syncing for multiple sales are quite confusing
11 Castillo, Andrea Kristel M. Automated Inventory System Of Lg Arambulo Enterprises. Diss. University of Asia
and the Pacific, 2017.
12 Shabdar, Ali. Mastering Zoho Creator: Build Cloud-Based Business Applications from the Ground Up. Apress,
2017.

8INVENTORY MANAGEMENT
 Reporting tool is bit sluggish and takes little bit of trial and error for figuring out which
information is related to which report13
Conclusion
It can be concluded from the above discussion regarding different software for inventory
management it seemed that Fishbowl inventory manufacturing software is best option to choose.
Reason behind this is that except update issue it does not have any other analysis while others
have some limitations. Further, Fishbowl is cost effective as compared to others.
13 Maqueira Marín, Juan Manuel, et al. "Design and implementation of an ERP platform as practice environment for
learning in Operations Management." Working Papers on Operations Management 8.SP (2017): 27-31.

9INVENTORY MANAGEMENT
Reference
Balcik, Burcu, Cem Deniz Caglar Bozkir, and O. Erhun Kundakcioglu. "A literature review on
inventory management in humanitarian supply chains." Surveys in Operations Research and
Management Science 21.2 (2016): 101-116.
Castillo, Andrea Kristel M. Automated Inventory System Of Lg Arambulo Enterprises. Diss.
University of Asia and the Pacific, 2017.
Disney, Stephen M., et al. "Inventory management for stochastic lead times with order
crossovers." European Journal of Operational Research 248.2 (2016): 473-486.
Gallino, Santiago, Antonio Moreno, and Ioannis Stamatopoulos. "Channel integration, sales
dispersion, and inventory management." Management Science 63.9 (2016): 2813-2831.
Mamani, Hamed, Shima Nassiri, and Michael R. Wagner. "Closed-form solutions for robust
inventory management." Management Science 63.5 (2016): 1625-1643.
Maqueira Marín, Juan Manuel, et al. "Design and implementation of an ERP platform as practice
environment for learning in Operations Management." Working Papers on Operations
Management 8.SP (2017): 27-31.
Muller, Max. Essentials of inventory management. HarperCollins Leadership, 2019.
Shabdar, Ali. Mastering Zoho Creator: Build Cloud-Based Business Applications from the
Ground Up. Apress, 2017.
Tirinato, Jody Ann, et al. "Point-of-care inventory management system and method." U.S. Patent
Application No. 10/024,734.
Wild, Tony. Best practice in inventory management. Routledge, 2017.