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stock outs (Palevich, 2011) and (Wisner, Tan and Leong ,2011). Once an organization realizes this, it can create online stock management instrument to screen its stock data by breaking it down into bunches by relating the categories with its customers.
Beamon and Kotleba (2006) clarify that Re-order level (ROL) is helping organizations to attain ideal efficiency and be successful. They got to have two reorder levels one that’s normal whereas a second one that’s for emergency cases .This gives customer satisfaction.
Bachetti, Plebani, Saccani and Syntetos (2010) argue that inventory management got to be organized in a consistent way to encourage the organization knowledge of when to order and amount to order. financial order amount enables organizations plan their inventory replenishment on a timely basis such as month to month quarterly half yearly or yearly basis. as organizations attempt to move forward on the stock management economic order quantity EOQ and re-order point ROP are important tools organizations can use to guarantee that stock supply does not hit a stock out as clarified by (gonzalez and gonzalez ,2010 )
just-in-time (JIT) contributes significantly to an organizations positive execution and client satisfaction. a study attempted that in the us to analyze inventory management was found out that organizations that kept as well much stock in their warehouse an wasteful supply chain whereas those that kept minimal stock in their warehouse were exceptionally effective ( lai and cheng ,2009). Also was found out that keeping direct stock is nice and it empowers an organization work negligible costs of holding and setup costs eliminate undesirable lead time and create products as per clients order. this enables an organization accomplish total quality control (TQC) as proficient and successful supply chain management are executed in a firms value chain kumar and suresh (2009) datta ( 2007) guarantee an unceasing supply of raw materials to encourage continuous production.
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1.3 Aref Contractor Company Background
Aref Controcter is one of the unique companies in Jeddah Saudi Arabia owned by Abdullah Aref Alsharif. It was founded in 2006. It offers the customer a variety of services such as a design for residential and public buildings, road design, road construction, and gardens. Aref Contracting has a large number of clients from Jeddah, Riyadh, Makkah, Dammam and Tabuk, and now wants to expand in Saudi Arabia. The success is a strong relationship with customers and the believe in customer satisfaction.
1.4 Aref Contractor Company nature
Aref Contractor Company is providing all materials, labor and equipment such as cars, tools, engineers and services required to build the project. The main contractor is the person who hires the workers to perform construction work.
1.5 Problem Background
Inventory management is important to both the contractor company and manufacturing company . The availability of goods and materials that have the right amount of finished products, components and / or raw materials is essential to the success of a business. For example, if a company that sells goods or services has insufficient inventory, sales may be lost when customers access another company to purchase available goods or services. The cost to the business can increase, because costs associated with overstocking may include, but are not limited to, maintenance, storage, depreciation, amortization, loss of assets, such as money, net interest income, and / or inventory impairment. In any case, over-inventory will allocate capital that can be used more effectively elsewhere. Manufacturing companies or contracting companies face many challenges. In this regard, a manufacturer may require a variety of manufacturing parts / components used in the manufacture of a good. Inventory of inadequate workforce from these components can result in production delays, delivery delays, and ultimately, low customer satisfaction. As
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with entrepreneurs, it is necessary to reconcile the need for available stocks with the cost of excessive stock (Henderson, M., Pytel, D., McCreary, P. and Cortes, G., Flowvision LLC, 2013).
1.6 Problem Statement
Any contracting company must manage its inventories effectively. Inventory management involves identifying inventory that must remain at hand at a given time, decisions regarding the purchase of raw materials in large quantities, the number of times physical orders are placed and the optimal time to submit a request. “Why do we always run out of stock?” A large number of contractors face the frustration and frustration of trying to maintain stable production processes at the same time, providing customers with appropriate services and maintaining investments in equities and equipment at reasonable levels. The fact that statements are made so often indicates the many conflicts of interest (Henderson, M., Pytel, D., McCreary, P. and Cortes, G., Flowvision LLC, 2013).
1.7 Research Objectives
Aiming to improve the service , this paper studies on inventory situations throughout the contractor company and manufacturing . The findings of this research will be the input for improve the inventory managment to retain customers’ loyalty and trust, also to maintain the reputation of Aref Contractor Company
The research objectives (RO) can be further detailed as follows:
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? To determine the extent of inventory management techniques application in Aref Contractor.
? To establish the challenges of inventory management implementation techniques in Aref Contractor.
? To examine basic action models (such as EOQ), safty stocks also amount of work.
? To find out how much the company loses by using quantitative volumes (EOQ).
? To determine if there is a relationship between inventory level and production level and customer services.
? Determine if there is a relationship between the inventory level and the profitability level of Aref Contracting Company.
? Finally. Make recommendations for improvement
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1.8 Research Questions
? The research questions (RQ) for this study are:
? Objective 1. What is the amount of economic order of the Aref Contracting Company ?
? Objective 2. Does the company buy in the amount of the economic order?
? Objective 3. What basic inventory models are most common for contractor companies and manufacturing companies?
? Objective 4. What should be the size of the inventory?
? 5. Is there a link between inventory levels and profitability?
1.9 Scope of Research
Inventory management is really a very broad area, but this study is limited to contractor companies, with special reference to the Aref Contractor Company in Jeddah Saudi Arabia.
the Investigations in this project is to what extent the inventory managment have affected the profitability, efficiency e.t.c. Also, attempts are made to analyses
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any cost savings . Efforts are also made to relate the level of inventory to the level of production and sales. Finally, inventory costs are related to the levels of profit with the aid of basic statistical tools .
1.10 Significant of the Study
It is important to consider the social and economic commitment to the growth of the country . So that all the ways that will improve the company’s growth ,it must be exploited, so the researcher’s hope is that this study is useful for owner of Aref Contractor Company and others.
This research project would help the management of Aref Contractor Company, to identify the most influential risk of inventory management and production. Furthermore, the study will also help the management of the company, to guide against losses .
1.11 Report Organization
In this course, three chapters will be covered that comprises introduction, literature review, and methodology.
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CHAPTER 2
2 LITERATURE REVIEW 2.1 Introduction
Of course, no one thought of an issue in the same way, but the profit of the companies depends on the good management , an issue that seems to be unanimous among the leaders of the company. This is what happened here, when we try to examine and examine the past and present work that deals with inventory management and the development of an economic quantity model suitable for contractor companies. The subject of inventory management has sparked much debate in public debates, workshops and symposia, at the local, national and international levels, between public institutions and policy makers, organizations and academics. Various efforts have been made through the management of new businesses through projects, incentives, etc. For the organization of workshops in the same field. A study of most scripts in inventory management has some common and interesting features. Many of these writings deal with most of the problems associated with inventory management; others still focus on the best inventory management model.
This literature review was largely based on journals, some ,owner interview and expert opinions on issues relevant to the objectives of this study. It is divided into the following items:
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? Historical sketch of inventory problems
? Specification of an inventory system
? Problem of inventory management
? Inventory Management Techniques
? Re-Order Level
? Economic Order Quantity
? Just-In-Time.
? Vendor Managed Inventory
? Activity Based Costing ( ABC )
? The balanced scorecard
2.2 Inventory management
Inventory management could be a bargains with administration of settled and current resources. Moreover, it involves the management of day by day operational supplies and in our case. Stock is additionally a basic resource in any organization in
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spite of the fact that agreeing to Barnes (2008) stock is looked at as a risk beneath the just-in-time (JIT) control framework. He agrees with the way accountants treat stock as an resource to the organization. Within the explanation of money related position, stock shows up beneath the current resources of the organization in any case whether it’s for benefit or not for benefit organization. Stock plays a major role and its administration goes a long way in making a difference a firm to develop because it relates to its external customers as well as the inner clients (Gibson, 2013). Therefore, stock is basic within the operation of Aref Contractor Company since they may hold stock as finished products, work in progress or raw materials for advance preparing (Fellows and Rottger (2005) and Shapiro (2009)). Shapiro, (2009) also advises that stock plays a crucial part when it comes to demand 15 planning and as a result, the organization needs to be flexible in its management of its stock when it comes to occasional or regular inventories.
Directors cannot avoid inventory management since it shapes the basis of their in general performance through disposal of uncertainties in their management. For the boards and management of Aref Contractor Company to find out that they are performing over standards, inventory management metric measures should be over board so that they may keep up the management’s certainty (Shapiro, 2009). Subsequently, Just-in-time concept has been found to have a few outlandish hidden cost that increment the cost of doing business in a few cases such as little suppliers to expansive companies .
In any case, the management of stock is important because the firm will be keen to guarantee that its resources and stock are well managed and request estimating is improved to avoid spontaneous acquirement. Stock can double up as stock and resources respectively. Therefore, when an organization improves request estimating, it enables the minimization of operational costs as well as client satisfaction (Hines and Bruce, 2007). When this is often done, it enables an organization plan for the longer term consequently applying different factors that an organization can use for its objective achievement to be specific: request and supply, taken a toll and staff requirements.
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2.3 HISTORICAL SKETCH OF INVENTORY PROBLEMS: Although inventory problems are as old as history itself, it has only been since the turn of the century that any attempts has been made to employ analytical techniques in studying these problems. The initial impetus for the use of mathematical methods in inventory analysisseems to have been supplied by the concurrent growth of the contractor company and the various branches of engineering, – especially industrial engineering. The real need for analysis was first recognized in industries that had a combination of production scheduling problems and inventory problems i.e. in situations in which items were produced in lots – the cost of set up being fairly high – and then stored at a factory warehouse (Ardichvili, A., Cardozo, R. and Ray, S., 2003).
2.4 SPECIFICATION OF AN INVENTORY SYSTEM:
The inventory system is basically an input-output system. In order to arrive at the best