Methods and policies for inventory management

Abstract

Inventories are goods that a company holds for sale. Since it is difficult to predict the amount of goods that are needed in the market, in order to prevent situations in which they do not have enough produced goods, manufacturers create inventories. The demand is not constant and producers are never sure how much inventory they will need, therefore stocks should be properly managed in all reproduction stages, i.e., in the various stages of conversion. The most important stages of inventory conversion are: inventory of raw materials, inventory of work in progress and inventory of finished products, and therefore they should be analyzed separately, identifying all the factors that affect them. Inventory control represents the performance of a large number of activities such as measuring, checking, examining and comparing in order to determine whether they are in accordance with the actual conditions.
Inventory control methods serve as a means of determining the optimal inventory size, as well as deciding when and in what quantity to make a specific order of the necessary supplies. The optimal inventory size should be evaluated in terms of the flexibility that can be given to the inventory. In determining their optimal size, the company's management must balance the benefit on the economy of production, the procurement and the increased demand for products, with the costs of maintaining additional inventory.
Therefore, the main research goal of this paper will be the application of management methods and policies in functionof optimization of inventory and achieving good financial results from the companies’ operations.