Multi-echelon Inventory Systems
The inventory models described in the preceding sections pertained to situations where the stock is located at a single place. In practice the stock may be distributed over several locations. For example in a multi-project organization, there may be a central store and a number of field stores or project stores. Such types of inventory systems are called `Multi-echelons inventory Systems’. Since the inventory in all the locations belong to the same system, it is better to look at the inventory management for the system as a whole rather than treating each storage location independently. Recently a lot of attention has been given by the researchers to the analysis of such multi-echelon inventory systems. Important decisions concerning the design and operation of such systems are the number of echelons, number of storage points at each echelon (level), location of central store, optimal inventory policy to be followed by each storage Location, stock redistribution policies etc. For very expensive slow moving item such as complex assemblies it may be desirable to locate the inventory at the central store rather than the project (field) store provided the item is standardized and is usable at each locations. Detailed mathematical analysis of multi-echelon inventory systems tends to be rather complex and is beyond the scope of this unit.
Materials Requirement Planning
Materials Requirement Planning (MRP) is an important concept and is increasingly becoming popular because of increasing role of computer based planning and control systems. MRP is useful for situations having products with inverted tree like structure so that the demand for parts and sub-assemblies is dependent upon the master production schedule of the end product. The MRP concept provided a very basic and different way of looking at the management of production inventories. MRP inputs are master production schedule; bill of materials and inventory status. MRP software package computes the parts requirement, and prepares production and procurement schedules. This indicates the increasing role of computers in inventory planning.
