What is Inventory in Operation Research?
In a broad sense, inventory may be defined as the stock of goods, commodities, or other economic resources that are stored or reserved in order to ensure the smooth and efficient running of business affairs.
The inventory or stock of goods may be kept in any of the forms: Raw material inventory, Work-in-process inventory, Finished goods inventory, furniture, machinery, fixtures, etc.
Inventory in operation research refers to the stock of goods, materials, and other commodities that a business holds to meet future demand. Inventory is a vital part of operational research since it helps in determining the best amount of stock and resources to maintain in a business environment.
Utilizing scientific approaches, inventory management determines when and how much stock to order and store, as well as when and how this stock will be used in production. That is, inventory management involves forecasting demand, ordering and receiving goods, storage and handling, and determining the appropriate levels of safety stock to ensure that a business can meet customer demand while keeping costs under control.
Inventory can also be used to analyze a company’s cost of goods sold and forecast future sales. In the end, inventory management helps in lowering operational costs and maximizing earnings. Hence, in order to balance the costs of holding too much inventory against the costs of stockouts or running out of stock, inventory management involves optimizing the level of inventory.
Read Also:
- Introduction/Definition of Inventory
- Objectives of Inventory Control
- Classification of Inventory control
- Inventory Decisions
- Inventory Management
- Objectives of Inventory Management
- How to Develop an Inventory Model?
- Costs involved in Inventory
- Why Inventory is Maintained?
- Tools and Techniques of inventory Management
- Deterministic and Probabilistic models in Inventory
- Risk in Inventory Management
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