ABSTRACT
This chapter presents an overview of inventory management and highlights the role of effective inventory management in the overall competitiveness of the Production and Operations Management function. It identifies the concept, the need for, and determination of Optimal levels of inventories in an organization. Starting with the classical Economic Order Quantity (EOQ) model developed more than a hundred years ago, it presents a taxonomy of inventory models and outlines the current status of inventory research as well as future research trends. Selective inventory management and aggregate inventory analysis are presented in ways that enable management to get a macro view of inventory polices and facilitate its rationalization. The role of inventories in supply chains in a multi-echelon inventory system framework is outlined. Emerging trends in inventory related models—such as stock dependent consumption phenomenon and bio-inspired inventory systems—are suggested. Strategic interventions such as variety reduction, lead time reduction, vendor development can have enormous impact on inventory reduction along with trading of inventory with information.
