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What are Inventory Models and Safety Stock?
Inventor models and safety stock are the terms that are used for the final products of the company. Inventory means the stock or the collection of raw materials known as inventory. And another word is safety stock which is work according to the systems and the facilities of the requirements in the organization. In the year, 1915 scientists who belonged to the management field applied the method of inventory to help inventory managers. Get the Best College Essays Written by Professional Writers and the best Inventory Models and Safety Stock Homework Help by Tutorspoint
In all types of organizations that inventory models are used to have the best inventory facilities in the organization. There are so many inventory models used in the organization along with the safety stock of the company. How much inventory is to order, and when to order? With low-value items, then how much to order and when this decision can be based on simple heuristics or rules of thumb. Twenty-five years later I found myself planning an inventory management strategy for Johnson and Johnson Medical as part of a University of South Florida research grant.
This was quite a different situation. If the annual cost to carry inventory is 20% of the item value, one can quickly see that more advanced decision rules are needed to make inventory management decisions to meet the demand of customers and on the other hand, the inventory while minimizing inventory costs. The Oldsmar operation involved the assembly of components into sterilized surgical kits which were then sold to hospitals around the world.
Will explain this with an example:
a company totally works with a product assembly strategy and for this, they make a schedule in this schedule 15 days for the inbound cycle but due to some uncertainty, it was late for 5 days. Shipment was late for 5 days so the company has to carry 5 days inventory cost of unfinished material and on the other hand, the finished product is late for 5 days. To avoid this kind of condition organizations use the Just in Time strategy and try to retain their market base. Just in Time also helps to reduce inventory levels and this leads to more profit margin on products.