INVENTORY CONTROL 
Modem information technology has created new possibilities for more sophisticated and efficient control of supply chains. Most organizations can reduce their costs associated with the flow of materials substantially. Inventory control techniques are very important components in this development process. A thorough understanding of relevant inventory models is a prerequisite for successful implementation.
1. Importance and objectives of inventory control
For more or less all organizations in any sector of the economy, supply chain management, i.e., the control of the material flow from suppliers of raw material to final customers is a crucial problem. The strategic importance of his area is today fully recognized by top management. The strategic importance of this area is today fully recognized by top management. The total investment in inventories is enormous, and the control of capital tied up in raw material, work-in-progress, and finished goods offers a very important potential for improvement. Scientific methods for inventory control can give a significant competitive advantage. This book deals with a wide range of significant competitive advantage. This book deals with a wide range of different inventory models that van be used when developing inventory control systems.
Advances in information technology have drastically changed the possibilities to apply efficient inventory control techniques. Furthermore, the recent progress in research has resulted in new and more general methods that can reduce the supply chain costs substantially. The field of inventory control has indeed changed during the last decades. It used to mean application of simple decision rules, which essentially could be carried out manually. Modern inventory control is based on quite advanced and complex decision models, which may require considerable computational efforts.
Inventories cannot be decoupled from other functions, for example purchasing, production, and marketing. As a matter of fact, the objective of inventory control is often to balance conflicting goals. One goal is, of course, to keep stock levels down to make cash available for other purposes. The purchasing manager may wish to order other large batches to get volume discounts. The production manager similarly wants long production runs to avoid time-consuming setups. He also prefers to have a large raw material inventory to avoid stops in production due to missing materials. The marketing manager would like to have a high stock of finished goods to be able to provide customers a high service level.
It is seldom trivial to find the best balance between such goals, and that is why we need inventory models. In most situations some stocks are
required. The two main reasons are economies of scale and uncertainties. Economies of scale mean that we need to other in batches. Uncertainties in supply and demand together with lead-times in production and transportation inevitably create a need for safety stocks. Still, most organizations can reduce their inventories without increasing other costs by using more efficient inventory control tools.
There are important inventory control problems in all supply chains. For those who are working with logistics and supply chains, it is difficult to think of any qualification that is more essential than a thorough understanding of basic inventory models.
There are two main reasons why an inventory control system needs to order items some time before customers demand them. First, there is nearly always a lead-time between the ordering time and the delivery time. Second, due to certain ordering costs, it is often necessary to order in batches instead of unit for unit . this means that we need to look ahead and forecast the future demand. A demand forecast is an estimated average of the demand size over some future period. But it is not enough to estimate the average demand. We also need to determine how uncertain the forecast is. If the forecast is more uncertain, a larger safety stock is required. Consequently, it is also necessary to estimate the forecast error, which may be represented by the standard deviation or the Mean Absolute Deviation(MAD).
2.1Preconditions for inventory control
Due to the development of modern information technology, an inventory control system is today usually computerized. There still exist, though, environments where it is more suitable to use simple manual systems. One example can be an inventory control system for items of low value such as office supplies or bolts. Ti can also be reasonable to use a manual control system when dealing with very few items. When discussing various practical aspects of inventory control, we shall, however, primarily think of a computerized system with many items.
2.2 Inventory records
To be able to use an inventory control model it is first of all necessary to have the required data available. this includes stock on hand, stock on order, backorders, various costs, lead-times, etc. If these data contain errors, the inventory control system will not be able to trigger orders as intended. When implementing an inventory control system it is
therefore vital to have good procedures foe keeping the inventory records accurate.
In general, it is especially difficult to keep track of the inventory position due to frequent receipts and deliveries of material. All such transactions are possible sources of errors. When an error has occurred, it can often affect the inventory control for a long time .there are two ways to overcome such problems. The first way is to improve the procedures for updating the records in connection with various transactions. In that way we can avoid having errors occur. The second way is to develop a good system for auditing and correcting inventory records.
2.3 updating inventory records
To keep the records accurate it is, of course, necessary to have correct procedures for updating the records in connection with different transactions. However, this is usually not the main problem. Instead the difficulty often lies in making sure that the procedures are followed. The most common source of error is, without any doubt, that transactions take place without being recorded properly.
The behavior of the personnel involved is obviously very important, first of all, the stockroom supervisors must take full responsibility for maintaining record accuracy. All personnel must be instructed and trained in stockroom operating procedures. the training should also provide motivation for keeping the records accurate, it is important to set accuracy goals and to measure the fulfillment of these goals. Errors that occur should be traced and analyzed, it is usually efficient to limit and control access to the storeroom. This can prevent most undocumented transactions.