Inventory management - a brief note

In the study of inventory management in the subject of operations management, I think we need to consider the following points:

1. Inventory management is not a separate problem domain in operations management; it belongs to one of the three main inter-related problem domains in operations managment, ie, capacity management, inventory management and scheduling.
2. Overall, the main objectives of managing these 3 problem domains in operations management are to maximize the twin objectives of "customers service level" and "resource utilization". (re: http://www.masterproductionscheduling.com/int-production-management.pdf)
3. To address the concerns in inventory management, increasingly companies focus at the supply chain level rather than at the individual firm level.
4. To address the concerns in inventory management, companies should address the root causes of the problems in this problem domain as well as to create a favourable operational environment so that inventory management problems become less serious or dissolved, e.g. by fostering a quality culture in corporations and by employing JIT practices.

In the literature on inventory management, there are specific approaches to deal with inventory management of raw materials, semi-finished products/ work-in-progress and finished products, as their operating environments are different, see the following diagram:

And we are told that, very often, there are conflicting priorities in inventory management among the departments of marketing, production and finance.

Finally, you also need to learn the mathematical technique in inventory management, notably on the EOQ formula.

References

1. On EOQ: http://en.wikipedia.org/wiki/Economic_order_quantity
2. On operations management (from Ray Wild): http://www.masterproductionscheduling.com/int-production-management.pdf