OBJECTIVES OF INVENTORY MANAGEMENT
The objectives of inventory management are to provide the desired level of customer service, to allow cost-efficient operations, and to minimize the inventory investment.
Customer Service
What is customer service? Customer service is a company's ability to satisfy the needs of its customers. When we talk about customer service in inventory management, we mean whether or not a product is available for the customer when the customer wants it. In this sense, customer service measures the effectiveness of the company's inventory management. Customers can be either external or internal: any entity in the supply chain is considered a customer.
Customer service
The ability to satisfy customer requirements.
Percentage of line items shipped on schedule
A customer service measure appropriate when customer orders vary in number of line items ordered.
Suppose your company, Kayaks!Incorporated, offers a line of kayaks and kayaking equipment through catalog sales and an accompanying Web site. As product manager, you need to know whether the inventory management system you introduced is effective. One way to measure its effectiveness would be to measure the level ...
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