what is inventory management and its importance for production operation management?

Question

economic order,quantity model order internal model,single period model etc.

Answer 1

The methods mentioned are simply ways to manage inventory. The importance of inventory management is that you don't want to have too much inventory, since this will tie up cash and you will lose the opportunity to invest, or worse will have to pay interest on credit used to finance the inventory. Also, you don't want to run out of inventory as this can cause product outages and lose sales and customers. Thus the models you have mentioned are used to try and guess the just right amount of inventory to carry. They do this by examining the cost of outages, the cost of transactions (high transaction costs imply higher inventory because you want to reduce transactions), the cost of capital (you want less inventory if you lose/pay a higher amount of interest), and the volatility of demad and delivery from suppliers.

Answer 2

Inventory management is maintaining adequate products while keeping replenishment expenses to a minimum and it's importance is to improve the supply chain and boost profits.