As we were talking about distribution network in the last week, I want to talk about inventories because it a part of the supply chain cost that is affect it by the distribution network design.
Some authors define inventory as the stocks of a piece or resource used in an organization. We can control inventory by an inventory system, that is the set of policies and controls that monitor the levels of inventories and determine those to maintain, the time when it is necessary to supply it and how big the orders should be. Inventory purposes are maintain independence between operations, cover the variation in demand, allow flexibility in production scheduling, and others. It important to control inventories because inventory is money!
Depending of the company and the production model that they prefer, it necessary to has a different amount of stocks in their warehouses, but is necessary analyze an inventory system that covers the necessities of the company.
Here we have an interesting video about inventory management: