Quantitative Decision Making-Inventory Control Models Essay

Quantitative Decision Making-Inventory Control Models - Essay Example Certain indicators tell us how inventory levels have been managed, as stated by Fleet-management consultant Roger Thompson, vice president, management, fleet and facilities with Bucher, Willis & Ratliff Corp (Skipper 1). Roger Thomson has found some common parameters on controlling inventory levels, which can be used to fleets overboard irrespective of the industry sector they serve. Topmost priority is to find the major share of the parts stocked. What matters is the dollar value of parts released from stock divided by the dollar value of all parts released off late. There should be probability of around 50 or 60 percent of the time the inventory part is available. If it is not so, then certainly things need to change. If the availability of the part is quite high, say near to 98 percent, it is a sign of overstocking of that part (Skipper 1). Another parameter of maintaining the right stock is the stock movement rate. If the number of stock lines without any exit in the previous 12 months is divided by number of stock lines, it should not be more than 5 percent (Skipper 1). One of the leading parameters of well controlled inventory is the inventory turn rate, according to Thompson, which can be arrived at by deriving the value of all parts released from the stock keeping unit and dividing it by the dollar amount of average annual inventory (Skipper 1).