Inventory control and purchasing-I

Classical Inventory Theory contains a number of explicit or implicit assumptions. These are considered in the context of purchasing. It is shown that statistical inventory theory cannot be applied to the raw material situation. Ordering and stockholding has to be planned using MRP methods. The splitting of the replenishment orders between several suppliers, as is a common practice within the purchasing function, has generally been ignored in work to date. Research on this aspect and its implications are described. Other problems highlighted for subsequent lectures are inflation in the purchase price and the existence of payment credit terms for orders.