Operations inventory management: Defining replenishment from requirements philosophy Essay

The requirements philosophy of inventory management and control aims to balance short term lower inventory and higher customer service. The materials requirements planner first determines the total amount of parts needed to produce a particular item on the production schedule. That is taking the output of a certain production schedule to be able to determine the needed items and raw materials, input, required to complete it. Current stock of parts are then located at the inventory database. The on-hand inventory is then subtracted from required quantity. The task is to break down the production schedule into all required parts which shall be used to schedule purchasing and manufacturing. (Burton & Bragg 2000). Requirements philosophy also recognizes the existence of subassemblies which is usually produced in advance or in parallel run prior to the manufacture of the final product or assembly. A schedule of the quantity and completion of the assemblies must be prepared to determine the exact date on which any part shall be purchased. Requirements planning involved timing. It extracts from the item master file the number of days or lead time required for a supplier to deliver a certain item from date of purchased. The cycle time or production time of each assembly must be determined to be able to achieved accuracy in production scheduling and purchase. Requirement philosophy is closely tied to the timing of transactions. Any change in the production schedule has a definite impact to major transaction changes that will call for urgent messages for urgent orders. (p. 150). Inventory replenishment refers to the need to calculate cost structures by using information about demand for better understanding of network topologies. It aims to understand service level requirements and its direct impact on inventory investment and allocation based on their relative supply chain. The inventory planner needs the information from the materials requirements planner to be able to manage direction and control of the flow of operations for the purpose of getting the perfect inventory level for a specific item for a specific period. Allowances on replenishment quantities at reorder point were then made for replenishment lead time and calculated safety stock to accommodate possible market demand fluctuations. This serves to be critical for incorrect information could mean probable stock out. Reorder actions served to preserve the integrity of the management inventory serviceability. Aspects of item cost, item physical and chemical characteristics, continuity of demand, shipping characteristics, and storage and handling requirements of the items were all taken into considerations. The determination of the reorder level then is guided by accurate computation of production cycle or working stock cycle which will temporarily respond to the average level of customer demand occurring during the period. Furthermore, a safety or buffer stock are then set on top of the level of requirements acting as allowances or additional inventory added to cycle stock in the event of variance in the normal distribution of demand. (Ross 1996). To differentiate, requirements philosophy supplies the specific requirements needed to support and complete a production schedule while replenishment philosophy is being computed on top of the required level of inventory taking into consideration the external factors of cost, lead time, shipping and storage requirements of the item in particular marked by determining a reorder level specification for each item or raw materials on record with high consideration on the factors of demand and supply availability.