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Inventory management involves in creating a purchasing
plan that will ensure that items are available when they are
needed and keeping track of existing inventory and its use.
There are two inventory management strategies available
in the operations contrast and they are.
JIT method and materials requirement planning.
To carry out the effective operation in a industry the
concept of inventory management is a most required term.
The overseeing and controlling of the ordering, storage
and use of components that a company will use in the
production of the items it will sell as well as the
overseeing and controlling of quantities of finished
products for sale.
if the inventory manager fails to estimate the raw
material for the production the operation department
of a industry will fail to produce the goods in terms of
supply meeting demand.
So forecasting the inventory is most important thing
A business inventory is one of its major assets and
represents an investment that is tied up until the item is
sold or used in the production of an item that is sold.
It also costs money to store, track and insure inventory.
Inventories that are mismanaged will create significant
financial problems for a business.
And also every department of a industry is related in
assessing the inventory and production department is
more relied on the inventory management after financial
In 1912 Leon wood bean invented the Maine hunting
shoe (a combination of lightweight leather uppers and
He obtained a list of non-resident Maine hunting
license holders, prepared a descriptive mail-order
circular, set up shop in his brothers basement in
Freeport, Maine, and started a nationwide mail-order
when L.L. Bean died in 1967, at the age of 94, sales
had reached $4.75 million, his company employed 200
people, and an annual catalogue was distributed to a
mailing list of 600,000 people.
L.L.’s Golden rule had been “sell good merchandise at a
reasonable profit, treat your customers like human
beings , and they will always come back for more.”
When Leon Gorman L.L.’s grandson, succeeded him as
a president in 1967, he sought to expand and
modernize the business without deviating from his
By 1991 L.L. Bean, Inc was a major cataloguer
manufacturer, and retailer in the outdoor sporting
Catalogue sales in 1990 were $ 528 million , with an
additional $71 million in sales from the company’s
50,000 square-foot retail store in Freeport.
Twenty-two different catalogues (often referred to as
“books” by company employees)- 114 million pieces in
all –were mailed that year. There were six million
The mail-order business had been giving way to
telephone orders after the company installed
nationwide “800” service in 1986. By 1991, 80% of all
orders came in by telephone.
L.L. Bean had not expanded its retail operations
beyond the one store in Freeport, Leon Gorman
contrasted the direct-marketing (catalogue) and retail
“The two approaches require very different kinds of
management. Mail-order marketers are very
analytic, quantitatively oriented. Retailers have to be
creative, promotional, pizzazz, merchandisedoriented.
It’s tough to assemble one management team that can
handle both functions.
Major competitors include:
Bass Pro Shop and many other.
Primary Target Customers include:
Avid(Marked by keen interest and enthusiasm)
Typically between the ages of 35 and 54.
No plans to target the younger “urban” segment
Overlap in circulation: The best customers received
almost all the catalogues.
Replenishments of same catalogues. The completed
fall 1991 catalogues were in the hands of customers
around August 1.As the catalogues generated demand
,Inventory managers decided an additional
commitments to vendors , sculled replenishments
,handled backorders, etc. this catalogue remained active
Inventory left over that time might be liquated ,marked
down and sold through special promotions
Each catalogue has a gestation period of about nine
months , and its creation involved merchandising
, design, product and inventory specialists.
Product managers developed preliminary item
forecasts by book in the Dec,1990 to Mar ,1991 time
frame. Layout and pagination of the books began in
Jan ,1991.initial commitments to vendors were made in
Jan and Feb.
In subsequent months, item forecasts were repeatedly
revised and finally “frozen” by May 1.By early July a
black-and-white version of the layout was available
internally. At this point , the product managers
handed off their product line to the inventory
Production lead time for most domestic orders was 8
to 12 weeks.
In case of observing early season demand, a second
order can b placed in sufficient time to meet late
One shot commitment
Various solutions to reduce the losses occurred due to
Analyze each step of inventory chain
(raw goods , goods in progress , finished goods)
based on past turnover and sales pattern.
Conduct regular inventory revise to help you asses
trends and manage the risks of holding too little or too
Always check goods against delivery receipt when they
Checklists on inventory received
Secure expensive and potentially hazardous products.
If necessary, identify expensive inventory that is
Just in time
Perpetual inventory system
Economic Order Quantity(EOQ)