Capacity Planning – Meaning, Classification and its Goals
February 12, 2025
As children, we have always had to prove to our teachers or our parents that we have been working. The homework book was proof that we have spent our time productively and would often calm down angry parents and teachers. It seems like the same principles also apply in corporate life! Harvard Business Review has […]
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Imagine one fine evening your nation’s top leader suddenly appeared on television to make an address. In this speech, he stated that the money which currently accounts for over 80% by value and 20% by volume of the entire money supply are suddenly going to be invalid i.e. worthless. They would cease to be legal […]
While coming up with operational metrics one must not forget to begin by first clarifying and defining what they mean. This is because there is a good chance that there may be ambiguity regarding what the metric really means. To better understand how to come up with operational definitions, the following procedure must be followed. […]
Supply-chain management plays a pivotal role in ensuring goods, and services are delivered on time to customers. Within supply-chain management, inventory management plays a central role. Inventory involves various cost, investment, space management, etc. Also there are chances that stored inventory may get damaged or get stolen adding to extra cost to the company. Therefore, it is important to have a robust inventory management for an organization.
For an organization, it becomes important to hold inventory for the following reason:
Considering the above inventory holding objectives, next step for the company is to make inventory related decision. Inventory decision involves two major considerations, first is the order quantity of the raw material and second is timing for placing those orders.
Inventory management is based upon two basic models i.e independent demand inventory model and dependent demand inventory model.
There are three broad categories of cost associated with inventory; holding cost, ordering cost and set up cost.
Inventory management ensures that organizations are able to minimize cost and maximize profit.
Just In Time is set of strategic activities, which are formulated to achieve maximum production with minimal maintenance of inventory. JIT as philosophy is applicable to various types of organization but on implement side it is more relevant with manufacturing operations.
For JIT system to be successful, there are two critical elements, attitude of workers/management and practice.
JIT is based on the following fundamentals:
With the above fundamentals in place, JIT delivers the following:
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