INVENTORY CONTROL.   Term Paper ID:13537 Click to get this paper

Essay Subject: Analyzes major functions in theory & applied to Lockheed & Perker Elmer Instrument companies. Production, planning, work in process, forecasts, sales orders, lead times, etc.... More...

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Paper Abstract: Analyzes major functions in theory & applied to Lockheed & Perker Elmer Instrument companies. Production, planning, work in process, forecasts, sales orders, lead times, etc. Paper Introduction: Inventory: The Key To Success This paper is an analysis of the basic concepts embodied in inventory control systems. This paper will examine how the economic maintenance of any inventory system is the key to success for companies dealing with a product. While inventory is common to all production methods, it can sometimes be considered in isolation from the over-all production methods. Although the question of inventory is strictly related to production, the holding of that question apart and separate is possible. The problems that primarily surround inventory control problems fall in three large areas: the-intangible nature of some factors, the spread of responsibility between departments, and the sheer complexity of some situations (Hobbs, 1973, p. 5). The inventory control system utilized in any company is Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Total knowledge of productioncapabilities is necessary to develop a production plan. W. Lawrence, KS: Regents Pressof Kansas. Managing work in process inventory. (1983, February 7). The jet makers. AviationWeek. Performed in an adequatemanner either through manual or mechanical techniques, successfulaccomplishment requires the capacity to maintain large amounts ofinformation relative to product, process, production status, and manning ina ready reference format. There are several key reporting mechanisms commonly used to controlproduction and inventory activities via the exception principle. Soft aerospace market cuts shortages. Thesales forecast indicates that the company expects to sell x units during aspecific period of time. Bluestone, B., Jordan, P., & Sullivan, M. Characteristic of this approach would be companies producingstandard products (which can be forecasted) offering options (specificsales orders) with a desired short delivery period (finished goodsinventory). The report would begenerated on an annual basis. Particular factors such as complexities of.theproduct, philosophy of the organizations, needs of the market, and therelationship of the company to the market all.have a bearing oh thisemphasis. 1981. Homewood, IL: Richard D. The sales forecast isa common source of product or model designation which is utilized by manycompanies for planning purposes. Berkeley, CA: U of California P. New York: Harper & Row. 15). For example, inventories exist in the form of raw materials andwork in process (WIP). The timely delivery of a customer's order is the result of inter-related series or chain of events. Inventory: The Key To Success This paper is an analysis of the basic concepts embodied in inventorycontrol systems. New York:Dekker. Raymond, A., & Associates. (1979). The various parts of the production-inventory system are tangible, such as trucks, factories, machines, andemployees. 67). (1978). NewYork: McGraw-Hill. Control over inventory and production. D. Included will be the part numberdesignation, description, inventory on hand, date and quantity orders,status of the time as to date of anticipated delivery, quantity to beavailable, reason for delay, and any alternatives. Sales order lead time is the timein which the customer desired the product or material or the time sales hasestablished as policy for normal delivery of orders to the customer. This will determine the method of operation relative tosales order lead time, inventory levels provided, and the general operatingmode. Fortune. Inventory control in production andmanufacturing. In addition it is desired to retain four instock. The inactive inventory report is intended to advise on the status ofinactive items of raw, semi-finished, and finished goods inventories. A very rigid production schedule willinclude exact order sequence to be run at each machine or work center andthe specific starting and ending time. This can result in a largeorganization with the use of sophisticated methods of scheduling employeesexerting a major impact on the operation of the facility. Forexample, if the sales policy is to deliver any order received within amaximum of two weeks and the normal production cycle is three weeks,material lead time four weeks, this will have a direct effect on companyoperating policy as it relates to production facilities and level ofinventory maintained. Using this concept, a plan indicating the level ofinventory desired to be maintained is the basic input for productionplanning. It is frequently used by companies producing a standard line ofproducts with only minimal variations or options available. The productionplan serves as the major network and generates the management thought anddecision process on all the other important contributing factors includingsales forecasting, manpower requirements, machine loading and capability,forecast modification, and inventory reporting and shortages. Stekler, H. Boulton, D. (1982, January 18). B. On the otherhand, without a stated sales order lead time with fabrication three weeksand material lead time four weeks, the sales order lead time can beexpected to extend as much as seven or eight weeks for delivery. This can be viewed as anaddition to the basic sales forecast (Buffa & Miller, 1979, p. Thomas, A. 35). (198 ). Production planning involves three time factors: material lead time,production lead time, and sales order lead time. Boston:Buttersworth. Industries employing this concept would be proprietary productsnot distributed on a broad market scale such as specialized equipment,tools, and instruments. (198 ), Inventory control. D. (1973). Althoughthe question of inventory is strictly related to production, the holding ofthat question apart and separate is possible. Allscheduling systems require three basic pieces of data from the productionplan: what, when, and how many. Business Week. (1975). They would be sold and shipped on an order basisbut without a waiting period for fabrication. (1983, February 21). However, in combination, the astutemanagement team is able to pin point the source in the production processthat needs further refinement. S., & Miller, J. Boston: HoughtonMifflin. Generally a separate report would be created for the variousclasses or-categories of shortages. (1978). (1971). A. A third source of forecast information is theDivision general manager who reserves the right to make management stockorders, essentiallyhedges on major products with long lead times. O. The basisof the schedule is the production plan translated into specific componentsthat can be charted, measured, and against the results can be reported andadjustments made as required. Lewis, C. Bright, C. (1982, January 11).Aviation Week. It includespreparation and order time, process time, assembly time, and inspection ortesting and making ready for shipment. Itincludes ordering time, supplier processing time, and shipping or deliverytime. Lead times, both internal and externaland other factors affecting the production load should alsobe available. Whether the scheduling system is very basic or very complex only thedegree of detail varies for the input date (Kivento, 1981, p. References Buffa, E. Aircraft industrydynamics. Hobbs, J. Stock control. 1973. Thismethod of reporting is used virtually throughout the aerospace industry,and Lockheed is no exception. Controlling production andinventory costs. Fortune. Another effect of the manufacturing process, whichrequires the existence of inventories, is the random effect of demand. Ifdemand is seasonal it may be more economical to absorb at least some of theseasonal demand through seasonal inventory rather than by attempting tovary-production levels to follow the demand curve closely. While inventory is common to all production methods, it can sometimesbe considered in isolation from the over-all production methods. The problems that primarilysurround inventory control problems fall in three large areas: the-intangible nature of some factors, the spread of responsibility betweendepartments, and the sheer complexity of some situations (Hobbs, 1973, p.5). The knowledge and capability of deciding what items will be produced in-house or purchased from a suppler must be available to enable a logicalproduction plan to be developed. It will also have far-reaching effects in the areasof hiring, over time, and other personnel-related policies. 4 ). Kivento, K. This paper will examine how the economic maintenance ofany inventory system is the key to success for companies dealing with aproduct. Itprovides the basis for measuring progress, determining when or if detoursoccur and forms a basis for decision-making during the production cycle.Production scheduling is one of the most detailed and demanding tasks inthe industrial organization (Gue, 198 , p. (1981). These factors all point to a basic conclusion that an intimateknowledge of product make-up as well as manufacturing capability is the keyto developing a logical and sound production plan. (1982, May 17). Englewood Cliffs, NJ: Prentice-Hall. (1981). (1981). Scientific inventory control. S. Irwin. On the other hand, a smaller company or one withvery simple, planning requirements will need only a guideline to accomplishthe work desired. A company policy must be adopted relativeto these factors. This concept is particularly important for the Perkin ElmerInstrument Division in that the annual business plan is based on a detailedinstrument-by-instrument forecast of order receipts made from the bottom-upanalysis of sales forecasts from the field sales and service personnel inthe marketing-division and a top-down analysis by the product managers.Differences between the two forecasts were resolved by furtherinvestigation and negotiation between two groups. In order to prepare to meet the changes in demand, it is arequirement to have a production plan--a formulated method by which salesforecasts will be analyzed, time factors (lead times) will be determined,and facilities and equipment capacity analyzer. There are a number of reasons why inventorymight be inactive and must be disposed of in an effective manner: primaryreasons include obsolescence, change in design, model change, and change inthe market itself. Lockheed aircraft corporation. Gue, F. Regardless of the shortage-being reported, basic information isrequired for all circumstances. (1968). Although the shortage has usually been defined as reflecting adeficiency in inventory, this deficiency may be related only to the plannedinventory and may or may not be a true physical outage. In developing a production plan, each of these factors has animportant influence on the operating policies of the organization. Key factorsinclude size and capability of equipment, tooling capability, rate ofproduction, skill inventory of personnel, types of equipment, alternatemethods of production, availability of subcontractors, tolerance andspecification requirements, finishing requirements, and special processing. At each phase of the cycle there are inventoriessimply because it is more economical to order in lots rather than to orderparts individually. Operations costing thousands of dollars per hour to operaterequire a very detailed, well-based plan to reduce the opportunity forsignificant losses in production. The structure and performance of theaerospace industry. Since these items aregenerally stocked in inventory for immediate delivery, sales rather thanorders are forecasted. The planning and control system is largely intangible, a systemwhich is used to guide and coordinate the flow of materials, labor, goods,and services. It determines the routeused to translate this production plan into production for sale. It is an estimate of anticipated salesfor a future period of time. Boston: Cahners Publishing. They are the majoringredients of the production plan and will vary in emphasis and intensityfrom company to company. When examining the productionprocess, it is found that inventories exist continuously throughout thesystem, not only at the specific sites in the process that are labeledinventory. Thomas, A. B. The total of x + 4 becomes the total requirements for theproduction plan. 48). Rice, B. The third element in production planning is a thorough knowledge offacilities and equipment capability. No rush to build up inventories. The production schedule itself is a specific plan of work to beaccomplished within a given period of time (Lewis, 1981, p. Itis an exception report signaling the inactivity of inventory and is usuallyrequesting that a decision be made on disposition. Depending upon the method and techniquesemployed, it can be a very rigid schedule exerting maximum control in avery structured format. G. Production-inventory systems. Material and production lead times can have a direct effect on thesales order lead time. (1965). Material lead time is the external time requiredfor suppliers to deliver orders placed for materials and or parts. Because it is an estimate (based upon variouspast data and judgement) it is subject to inaccuracies and frequentrevision. To prevent surprises and to be able to develop a sound productionplan, one that can truly be used as a road map and one that the totalorganization believes in, it is important that time factors be acknowledgedand treated in an open manner. The grease machine. The reputation of a company's abilityto deliver the goods is dependent upon its ability to bind the linkage andensure that the weakest link is strong enough to endure. Other References A strong plus from inventories. Manufacturers facing surpluses in materials. Farnborough, England: GowerPress.----------------------- 9 Individually, the exception reports do notprovide any type of picture. Theproduction-inventory control system is the physical system for producingand distributing goods and services. There are basically threesources of information for products or models that are to be produced:sales forecasts, sales orders, and inventory plans. The production schedule is the road map. The inventory control system utilized in any company is really partof two large systems which operate in the manufacturing world--theproduction-inventory system and the planning and control system. The physical structures represented by machines, factories, andwarehouses have often been likened to the skeleton of the human body.Building on that analogy, perhaps the flow of goods and materials throughthe system, marked by the existence of inventories, represents thelifeblood (Buffa & Miller, 1979, p. Some degree of mental recall is also mandatory,in addition to the various forms, reports, and other documents used totrack progress. (1982, November 15).Fortune. The worst of the inventory drag is over. The planning and control system guides the intangible partsof business through the tangible parts, the production-inventory controlsystems. Production lead time is an internal time allotment required toprocess materials and parts into the required product(s). Cash management.Lexington, MA: Lexington Books. For instance, the shortage report reflects a deficiency in inventoryand includes raw material purchased, and manufactured parts and finishedproducts. In addition to theforecast of orders for instruments, the sales of spare parts for technicalservice and accessory items were also forecasted. Boston: Auburn House. Specific industries would include light aircraft, foodprocessing, and machine tooling. Homonoff, R., & Millins Jr., D. The stock pile tumbles down. Many companies use all three sources of input for productionplanning. Reston, VA: RestonPublishing. Rigid scheduling and control requirements generally exist in largercompanies requiring complex planning, scheduling, and coordinatingprocesses. An inventory plan is basically an extension or variation of the basicsales forecast. (1978). If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.