Inventory Management

The modern era of inventory management began in 1913 with the publication of a paper by a Westinghouse engineer, Ford W. Harris, on inventory optimization; over the succeeding decades, dozens of new and more ..... inventory optimization techniques were invented.

"But suddenly the music stopped," exclaims George Brown of Ewe Lamb Technologies: in the early 1980s, Japanese corporations began ..... out industry after industry in the United States and Europe.

From analyses of their successes, one factor was obvious - Japan ..... far less inventory in proportion to sales than was considered 'optimal' - and minimization subsequently superseded optimization as the guiding philosophy of inventory management.

Minimization dogma says that inventory is the corporate equivalent of 'fat' and should therefore be eliminated; treasury, for its part, was more than happy to endorse this fashionably ..... philosophy.

After all, through the magic of the liquid asset cycle, reductions in inventory wonderfully reappear as cash in treasury's ......

Minimization's ..... song was that 'a corporation can never be too rich or too lean'.

A second explanation for the minority's inventory-contentment is almost certainly the misuse of 'nave' ratios (a ratio is said to be nave when it is completely ..... from true corporate objectives and performance).

Most common naive ratios are 'inventory-to-sales' and its reciprocal, 'turns', which can provide a comforting but false sense of accomplishment as their numbers 'improve'; the inherent ..... of both is the assumption that less inventory is always better than more.

This simply is not true: anyone who experienced the barren shelves of Moscow's Soviet-era department stores, or is told by a ..... that there are no more coffee-lids, will attest to the obvious fact that inventory shortages are a major source of customer dissatisfaction, lost sales, and lost profit.

The two major failed philosophical opposites, minimization and optimization, happen to nail down the extreme ends of a broad 'feasibility range' for inventory, and by slicing the middle ..... into a series of progressive investment options, we can calculate the expected returns, maturities, and risks for each increment.