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Q14-1DQ

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Operations And Supply Chain Management
Found in: Page 368
Operations And Supply Chain Management

Operations And Supply Chain Management

Book edition 14th
Author(s) F. Robert Jacobs
Pages 800 pages
ISBN 9780078024023

Short Answer

Is it possible to achieve zero inventories? Why or why not?

Inventory refers to a firm's ready-to-sell items, as well as the materials utilized to manufacture goods.

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Step by Step Solution

Inventory

Inventory is the recording of goods, basic components, as well as raw materials that a corporation consumes as well as distributes. Inventory pertains to all of the things, commodities, commerce, as well as materials held by a company to resell in the marketplace for revenue

Is it possible to achieve zero inventories

The concept of zero inventories is connected to the concept of just-in-time production. The main purpose of this method is to decrease stock management expenses by achieving a zero inventory level. This strategy, however, is not practically practicable due to the following reasons:

  1. Since the future is constantly uncertain, all businesses must have a certain quantity of stock on hand for emergencies.
  2. Most businesses claim to have zero stocks; nevertheless, their stocks are transferred to their vendors, who arrive at the time of their production.
  3. Stock will always be available due to lead time restrictions.

As a result, zero inventory may be defined as the concept. Firms can decrease their stocks to a certain minimal level, however, zero stocks are impossible to accomplish.

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