Quantitative Analysis for Management, 13/e

6.2 Inventory Decisions

Even though there are literally millions of different types of products produced in our society, there are only two fundamental decisions that you have to make when controlling inventory:

1. How much to order

2. When to order

The purpose of all inventory models and techniques is to determine rationally how much to order and when to order. As you know, inventory fulfills many important functions within an organization. But as the inventory levels go up to provide these functions, the cost of storing and holding inventory also increases. Thus, you must reach a fine balance in establishing inventory levels. A major objective in controlling inventory is to minimize total inventory costs. Some of the most significant inventory ...