Inventory Level Management using ARENA simulation

Abstract

In the modern era, businesspersons have shown growing responsiveness of the requirement for precession in the field of inventory control.

Previously, inventories were an indication of wealth; even though inventories are kept in liquidity has

directed businesspersons to hold cash and securities. There had been a solid tendency towards holding

the means of purchase goods rather than the goods themselves.

Inventories are often referred to as "graveyard" as surplus stock has been principle cause of business failure. Business cycles are influenced in inventories, which are also considered as destabilizing, in fact, there is instability and collapse, which have been the focal point. As a result, almost pathological fear of increasing inventories has developed by businesspersons.

An examine on inventory management of LGEIL is under taken to know how inventories are controlled through the business enterprise and various techniques which are used by the corporation in dealing with the stock effectively. To evaluate the overall performance of inventory many techniques and inventory ratios are used. By means of the study a strive has been made to come to a conclusion with the help of experience derived by the company, arena simulation and with the help of theoretical understanding.

A manufacturing establishment converts raw materials into finished goods (FG), this includes sales cost, conversation cost as well as raw material cost. A manufacturing company has three types of inventory accounts: Raw ingredients, work in progress (WIP), finished goods and indirect material. Manufacturing company fundamental feature is to transform raw material into consumable products. In any company, in any agency, cost of sales within the total of the acquisition cost plus conversation cost of the products that is sold. The manufacturer therefore includes value of goods sold the cost of material and elements used the cost of labour and other cost incurred in manufacturing of goods that are sold. The cost must be obtained by collecting the aggregate numerous elements of manufacturing price.