Inventory Cost Minimization
Minimizing the Inventory Cost in the Production Management: Just in Time (JIT) Manufacturing System is a Mile Stone
Shirajul Islam
M. Phil Researcher, Jahangirnagar University, Savar, Dhaka
Abstract
This article explains how a firm manages her inventory to gain minimum production cost and earn business success by using JIT (Just in Time) Manufacturing System. It provides a mathematical framework to understand the performance of a farm, and argues that inventory cost minimization method is an approach that helps a farm to be competitive and successful. JIT inventory management system has been elaborated by reducing set-up times and lead times so that small lots may be ordered as and when required. The holding cost for space rent reduces significantly as the orders are put to the suppliers just in time, which is described in this paper.
Keywords and Phrases: JIT (Just in Time), Inventory System, Kanban, Transaction Inventories, Speculative Inventory and Precautionary Inventory, EOQ (Economic Order Quantity), Holding Cost, Set up Cost, Buffer Stock.
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Introduction
Minimizing the production cost of a company is a vital factor over the others to increase the profit in this competitive world. It is very important for a company to manage its production process and a supply chain to reduce this cost, and one of the most important aspects of inventory management is to have the items in stock at the moment those are needed, which helps the managerial key personnel to minimize the inventory cost. To minimize the inventory cost, Project management needs to plan carefully so as to earn maximum profit by using minimum cost and time. One of the objectives of the company is to manage the entire supply chain to reduce costs, thereby to earn business success.
This article explores and explains how a firm manages her inventory to gain minimum production cost and earn business success by using JIT (Just in
Shirajul Islam
M. Phil Researcher, Jahangirnagar University, Savar, Dhaka
Abstract
This article explains how a firm manages her inventory to gain minimum production cost and earn business success by using JIT (Just in Time) Manufacturing System. It provides a mathematical framework to understand the performance of a farm, and argues that inventory cost minimization method is an approach that helps a farm to be competitive and successful. JIT inventory management system has been elaborated by reducing set-up times and lead times so that small lots may be ordered as and when required. The holding cost for space rent reduces significantly as the orders are put to the suppliers just in time, which is described in this paper.
Keywords and Phrases: JIT (Just in Time), Inventory System, Kanban, Transaction Inventories, Speculative Inventory and Precautionary Inventory, EOQ (Economic Order Quantity), Holding Cost, Set up Cost, Buffer Stock.
________________________________________________________________________
Introduction
Minimizing the production cost of a company is a vital factor over the others to increase the profit in this competitive world. It is very important for a company to manage its production process and a supply chain to reduce this cost, and one of the most important aspects of inventory management is to have the items in stock at the moment those are needed, which helps the managerial key personnel to minimize the inventory cost. To minimize the inventory cost, Project management needs to plan carefully so as to earn maximum profit by using minimum cost and time. One of the objectives of the company is to manage the entire supply chain to reduce costs, thereby to earn business success.
This article explores and explains how a firm manages her inventory to gain minimum production cost and earn business success by using JIT (Just in
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