Introduction This paper presents a discussion of production and inven tory management. Inventory control is concerned with the plan ning, organization, and control of materials management, pro duction, stocking, and distribution (Magee, and Boodman, 1989). In the early 1990s, both economic and industrial environments are dynamic. Thus, inventory control practices and procedures must be capable of supporting effective decision making in these dynamic environments.
Inventories: Definition and Need for Control
The American Production and Inventory Control Society defines inventories as stock keeping items, held at stocking points, and serving to decouple successive operations in a manufacturing or distribution process (Fogarty, and Hoffmann, 1983). Inventories may also be defined in an accounting con text, as "the aggregate of those items of personal property which are (1) held for sale in the ordinary course of business, (2) in the process of production for later sale, or (3) held forcurrentconsumption in the production ofgoods and services
. . . for sale" (Meigs, and Meigs, 1983, 110). Inventories may be comprised of tangible goods, such as aircraft parts, or of
intangible services, such as airline tickets. What is signifi cant, in this context, is that the goods and services be owned by the entity possessing the inventories.
Inventory management and control is an important manager ial function. There are many factors providing significance to the inventory management and control function. Among the more significant of these factors are the following:
1. It costs money to maintain inventories.
2. It costs money to maintain inadequate inventories.
3. Inventories are subject to obsolesence.
4. Inventories are subject to physical deterioration.
5. Inventories are subject to theft.
6. Inventories are subject to price deterioration.
Inventories often represent a major proportion of an o...