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Managing Inventories in a JIT Environment
Author(s) -
Joshi Kailash,
Campbell James F.
Publication year - 1991
Publication title -
international journal of purchasing and materials management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.75
H-Index - 92
eISSN - 1745-493X
pISSN - 1055-6001
DOI - 10.1111/j.1745-493x.1991.tb00531.x
Subject(s) - purchasing , inventory management , point (geometry) , economic order quantity , operations research , computer science , operations management , inventory control , consumption (sociology) , business , delivery performance , marketing , economics , process management , mathematics , supply chain , social science , geometry , sociology
The advent of JIT systems requires a new approach to inventory management. This article identifies the characteristics of JIT purchasing environments and suggests an alternative formulation to the traditional EOQ model for managing inventories. The article proposes that at any point in time inventory costs can be minimized by fully utilizing the available delivery receiving capacity. A model is developed to determine the optimal delivery frequency for individual items in an organization that receives hundreds or thousands of different items. The model optimally allocates the delivery receiving capacity among individual items to minimize the total inventory costs. The optimal delivery frequency for each item depends on the total delivery receiving capacity and the square root of the annual consumption of the item. This model provides guidelines for JIT purchasing by materials managers and can easily be applied in practice.