Inventory costs refer to the aspect of holding goods in stock. Often, this is expressed as a percentage of the inventory value. Ideally, this includes warehousing, capital, insurance, depreciation, obsolesce, taxation as well as the shrinkage of costs (Dev et al., 2017). In regards to the relationship of costs and inventory management, it is generally anticipated that the various costs associated with inventory management effects on the overall process of the management of materials. Categorically, the costs involved in inventory management include the purchase costs, ordering costs, carrying costs and last but not least direct costs such as capital, service, and risk as well as storage space costs (Dev et al., 2017).
According to Dev, Shankar and Choudhary (2017), inventory takes typical identities within a given manufacturing company and it is depended on the individuals outlook. Therefore, the following are the suggested methods to reduce inventory costs: reduction of demand variability, improvement of forecast and data accuracy, a re-examination of the level of services, reduction of the sizes of orders, addressing the capacity issues, and improvement of supply reliability. The reduction of the number of items, elimination of questionable practices, Reduction of the manufacturing and supply lead times, cleaning of the attic, replenishing based on market demand as well as the reconfiguration of the supply chain among many other suggestions.
Aviation Maintenance managers responsibilities that will ensure sustainability of proper inventory levels include but not limited to: Breaking down of the operating system inventory into the three primary categories when reporting; replenishment, safety and obsolete or excess stock. Ensuring that there is the utilization of effective methods in the calculation of the safety stock levels in their companies (Rissiek & Bardram, 2017). Recalculating of the stock levels on a regular basis with an objective of ensuring they are up to date, making decisions on key inventory- related policies like striking an effective balance between the services of the customers as well as the cost-effective product inventory levels. Determining the optimal frequencies in the production of ordering products and performance of root-cause analysis on an absolute or excessive stock as well as underpinning the links in planning actions in curbing their excessive creation (Rissiek & Bardram, 2017).
Dev, N. K., Shankar, R., & Choudhary, A. (2017). Strategic design for inventory and production planning in closed-loop hybrid systems. International Journal of Production Economics, 183, 345-353.
Rissiek, J., & Bardram, M. (2017). The Material Value Chain Services in Commercial Aviation. In Supply Chain Integration Challenges in Commercial Aerospace (pp. 249-265). Springer International Publishing.
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