A Critical Review of the Inventory System of a Firm for Introducing M R P

Abstract

Material Management in general and Inventory Control in particular are of great importance to the manufacturing industry because materials are a vital input to the production system . Since materials , in general , contribute more than 50 to the cost of production , their availability in right quantity and quality at proper time , at a reasonable cost ( procurement as well as storage ) required a careful and specific attention . Further more there has to be an organised and efficient way of storage , un-keep issue and utilization of the material resource . In this context inventory control assumes a great importance. In the beginning inventory control was an intuitive process based on experience and judgement but later it developed into a more scientific activity , particularly since the start of 20Th century . The concepts of Selective inventory control , Economic lot size and the EOQ came into being . Techniques were then developed with overall production schedule in background resulting in the concept of Aggregate Inventory Management . However , these techniques could not cope with the dynamic nature of inventory management in the context of modern manufacturing environment . These techniques had to work without proper means of huge inventory data processing and were based on some short cut approximation methods with assumptions which were not appropriate in real life situations in manufacturing industry . But with the availability of computers capable of handling information in large volumes at high speed the individual manufacturing inventory items requirement can now be pin-pointed in terms of both quantity and timing . As such the traditional inventory control techniques have been rendered obsolete in dynamic manufacturing environs . New techniques like material requirements planning and just-in-time inventory control have emerged as more appropriate