Applicability of JIT Techniques in Service Environments

The first 200 words of this essay...

LITERATURE REVIEW PROJECT:

Applicability of JIT Techniques in Service Environments

Research & Development Methodology

-17.01.2005-

Introduction:

Importance of inventory management in business is evident. Since inventories make up a substantial part of total assets, reducing inventories to a minimum is desirable. Holding inventory is financially costly and there is more to it than just financial cost. In any kind of business inventories also indicate to inefficiencies in the business process.

There are several different reasons for carrying inventory. As Barlow cites from Coyle (Barlow 2002) these are:

* purchasing economies

* transportation savings

* safety/buffer stock

* speculative purchases

* seasonal supply

* maintenance of supplier source

First three of these reasons it related to operational structure of the business. Rationale behind these is basically argues that bigger lot sizes will save the buyer in terms of financial costs and it is assumed that cost of carrying inventory is lower than these savings. Safety/buffer stock argument is about continuity of the production/business. Inventory in this context enables business process to run smoothly without any interruptions and again it is