Inventory two extremes. It is therefore, the

Inventory management is the artwork and science of attaining the set targets of deciding to buy the materials at the lowest viable costs, making sure sufficient go with the flow and making the most economical use of such materials in order that the total cost of production is minimized through the creation of such an environment that would enable the humans make a contribution to the success of the objectives with least quantity of such inputs as money, time, materiality.

On the different hand, inventory manipulate is the science primarily based art of making sure that enough inventory is held via an agency to meet economically both its internal and external demand commitments. There can be dangers in holding both very a good deal or too little inventory, as such, inventory control is principally concerned with acquiring the correct balance or compromise between these two extremes. It is therefore, the extent that should be held that management is interested in.1.

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2 Inventory managementOrganization’s stock is an important component and its management is imperative to the company and cost lessening of the firm’s use. Appropriate warehousing of stock so that when products are requested, they are held at the warehouse for the least time conceivable minimizing holding cost of stock (Wild, T., 2017).

Consequently, other operational costs may increment inventory management costs like through the balance of requesting costs, holding costs, security stock and14stock outs (Palevich, 2011) and (Wisner, Tan and Leong ,2011). Once an organization realizes this, it can create online stock management instrument to screen its stock data by breaking it down into bunches by relating the categories with its customers.Beamon and Kotleba (2006) clarify that Re-order level (ROL) is helping organizations to attain ideal efficiency and be successful.

They got to have two reorder levels one that’s normal whereas a second one that’s for emergency cases .This gives customer satisfaction.Bachetti, Plebani, Saccani and Syntetos (2010) argue that inventory management got to be organized in a consistent way to encourage the organization knowledge of when to order and amount to order. financial order amount enables organizations plan their inventory replenishment on a timely basis such as month to month quarterly half yearly or yearly basis.

as organizations attempt to move forward on the stock management economic order quantity EOQ and re-order point ROP are important tools organizations can use to guarantee that stock supply does not hit a stock out as clarified by (gonzalez and gonzalez ,2010 )just-in-time (JIT) contributes significantly to an organizations positive execution and client satisfaction. a study attempted that in the us to analyze inventory management was found out that organizations that kept as well much stock in their warehouse an wasteful supply chain whereas those that kept minimal stock in their warehouse were exceptionally effective ( lai and cheng ,2009). Also was found out that keeping direct stock is nice and it empowers an organization work negligible costs of holding and setup costs eliminate undesirable lead time and create products as per clients order.

this enables an organization accomplish total quality control (TQC) as proficient and successful supply chain management are executed in a firms value chain kumar and suresh (2009) datta ( 2007) guarantee an unceasing supply of raw materials to encourage continuous production.151.3 Aref Contractor Company BackgroundAref Controcter is one of the unique companies in Jeddah Saudi Arabia owned by Abdullah Aref Alsharif. It was founded in 2006. It offers the customer a variety of services such as a design for residential and public buildings, road design, road construction, and gardens.

Aref Contracting has a large number of clients from Jeddah, Riyadh, Makkah, Dammam and Tabuk, and now wants to expand in Saudi Arabia. The success is a strong relationship with customers and the believe in customer satisfaction.1.4 Aref Contractor Company natureAref Contractor Company is providing all materials, labor and equipment such as cars, tools, engineers and services required to build the project. The main contractor is the person who hires the workers to perform construction work.

1.5 Problem BackgroundInventory management is important to both the contractor company and manufacturing company . The availability of goods and materials that have the right amount of finished products, components and / or raw materials is essential to the success of a business. For example, if a company that sells goods or services has insufficient inventory, sales may be lost when customers access another company to purchase available goods or services. The cost to the business can increase, because costs associated with overstocking may include, but are not limited to, maintenance, storage, depreciation, amortization, loss of assets, such as money, net interest income, and / or inventory impairment. In any case, over-inventory will allocate capital that can be used more effectively elsewhere.

Manufacturing companies or contracting companies face many challenges. In this regard, a manufacturer may require a variety of manufacturing parts / components used in the manufacture of a good. Inventory of inadequate workforce from these components can result in production delays, delivery delays, and ultimately, low customer satisfaction. As16with entrepreneurs, it is necessary to reconcile the need for available stocks with the cost of excessive stock (Henderson, M., Pytel, D., McCreary, P.

and Cortes, G., Flowvision LLC, 2013).1.6 Problem StatementAny contracting company must manage its inventories effectively. Inventory management involves identifying inventory that must remain at hand at a given time, decisions regarding the purchase of raw materials in large quantities, the number of times physical orders are placed and the optimal time to submit a request. “Why do we always run out of stock?” A large number of contractors face the frustration and frustration of trying to maintain stable production processes at the same time, providing customers with appropriate services and maintaining investments in equities and equipment at reasonable levels.

The fact that statements are made so often indicates the many conflicts of interest (Henderson, M., Pytel, D., McCreary, P.

and Cortes, G., Flowvision LLC, 2013).1.7 Research ObjectivesAiming to improve the service , this paper studies on inventory situations throughout the contractor company and manufacturing . The findings of this research will be the input for improve the inventory managment to retain customers’ loyalty and trust, also to maintain the reputation of Aref Contractor CompanyThe research objectives (RO) can be further detailed as follows:17? To determine the extent of inventory management techniques application in Aref Contractor.

? To establish the challenges of inventory management implementation techniques in Aref Contractor.? To examine basic action models (such as EOQ), safty stocks also amount of work.? To find out how much the company loses by using quantitative volumes (EOQ).

? To determine if there is a relationship between inventory level and production level and customer services.? Determine if there is a relationship between the inventory level and the profitability level of Aref Contracting Company.? Finally. Make recommendations for improvement181.8 Research Questions? The research questions (RQ) for this study are:? Objective 1. What is the amount of economic order of the Aref Contracting Company ?? Objective 2.

Does the company buy in the amount of the economic order?? Objective 3. What basic inventory models are most common for contractor companies and manufacturing companies?? Objective 4. What should be the size of the inventory?? 5. Is there a link between inventory levels and profitability?1.9 Scope of ResearchInventory management is really a very broad area, but this study is limited to contractor companies, with special reference to the Aref Contractor Company in Jeddah Saudi Arabia.

the Investigations in this project is to what extent the inventory managment have affected the profitability, efficiency e.t.c. Also, attempts are made to analyses19any cost savings . Efforts are also made to relate the level of inventory to the level of production and sales.

Finally, inventory costs are related to the levels of profit with the aid of basic statistical tools .1.10 Significant of the StudyIt is important to consider the social and economic commitment to the growth of the country . So that all the ways that will improve the company’s growth ,it must be exploited, so the researcher’s hope is that this study is useful for owner of Aref Contractor Company and others.This research project would help the management of Aref Contractor Company, to identify the most influential risk of inventory management and production. Furthermore, the study will also help the management of the company, to guide against losses .

1.11 Report OrganizationIn this course, three chapters will be covered that comprises introduction, literature review, and methodology.20CHAPTER 22 LITERATURE REVIEW 2.

1 IntroductionOf course, no one thought of an issue in the same way, but the profit of the companies depends on the good management , an issue that seems to be unanimous among the leaders of the company. This is what happened here, when we try to examine and examine the past and present work that deals with inventory management and the development of an economic quantity model suitable for contractor companies. The subject of inventory management has sparked much debate in public debates, workshops and symposia, at the local, national and international levels, between public institutions and policy makers, organizations and academics. Various efforts have been made through the management of new businesses through projects, incentives, etc. For the organization of workshops in the same field. A study of most scripts in inventory management has some common and interesting features.

Many of these writings deal with most of the problems associated with inventory management; others still focus on the best inventory management model.This literature review was largely based on journals, some ,owner interview and expert opinions on issues relevant to the objectives of this study. It is divided into the following items:21? Historical sketch of inventory problems? Specification of an inventory system? Problem of inventory management? Inventory Management Techniques? Re-Order Level? Economic Order Quantity? Just-In-Time.? Vendor Managed Inventory? Activity Based Costing ( ABC )? The balanced scorecard2.2 Inventory managementInventory management could be a bargains with administration of settled and current resources.

Moreover, it involves the management of day by day operational supplies and in our case. Stock is additionally a basic resource in any organization in22spite of the fact that agreeing to Barnes (2008) stock is looked at as a risk beneath the just-in-time (JIT) control framework. He agrees with the way accountants treat stock as an resource to the organization. Within the explanation of money related position, stock shows up beneath the current resources of the organization in any case whether it’s for benefit or not for benefit organization. Stock plays a major role and its administration goes a long way in making a difference a firm to develop because it relates to its external customers as well as the inner clients (Gibson, 2013). Therefore, stock is basic within the operation of Aref Contractor Company since they may hold stock as finished products, work in progress or raw materials for advance preparing (Fellows and Rottger (2005) and Shapiro (2009)).

Shapiro, (2009) also advises that stock plays a crucial part when it comes to demand 15 planning and as a result, the organization needs to be flexible in its management of its stock when it comes to occasional or regular inventories.Directors cannot avoid inventory management since it shapes the basis of their in general performance through disposal of uncertainties in their management. For the boards and management of Aref Contractor Company to find out that they are performing over standards, inventory management metric measures should be over board so that they may keep up the management’s certainty (Shapiro, 2009). Subsequently, Just-in-time concept has been found to have a few outlandish hidden cost that increment the cost of doing business in a few cases such as little suppliers to expansive companies .

In any case, the management of stock is important because the firm will be keen to guarantee that its resources and stock are well managed and request estimating is improved to avoid spontaneous acquirement. Stock can double up as stock and resources respectively. Therefore, when an organization improves request estimating, it enables the minimization of operational costs as well as client satisfaction (Hines and Bruce, 2007). When this is often done, it enables an organization plan for the longer term consequently applying different factors that an organization can use for its objective achievement to be specific: request and supply, taken a toll and staff requirements.232.

3 HISTORICAL SKETCH OF INVENTORY PROBLEMS: Although inventory problems are as old as history itself, it has only been since the turn of the century that any attempts has been made to employ analytical techniques in studying these problems. The initial impetus for the use of mathematical methods in inventory analysisseems to have been supplied by the concurrent growth of the contractor company and the various branches of engineering, – especially industrial engineering. The real need for analysis was first recognized in industries that had a combination of production scheduling problems and inventory problems i.

e. in situations in which items were produced in lots – the cost of set up being fairly high – and then stored at a factory warehouse (Ardichvili, A., Cardozo, R. and Ray, S., 2003).

2.4 SPECIFICATION OF AN INVENTORY SYSTEM:The inventory system is basically an input-output system. In order to arrive at the best inventory policy i.e.

the best decision rules for when and how much to order, it is necessary to have a clear picture of the inventory system.24Figure 1 An input-Output representation of an Inventory System.2.

5 PROBLEM OF INVENTORY MANAGEMENT:The problem of inventory involves the formulation of decision rules that answer two important questions:1. When to place an order (or configure it for production) to restoreinventory?2. How much should you ask for (or produce) for each supply? the decision-making rules should aim to meet the expected demand at a minimum or maximum cost of benefits. (Puche, J.

, Ponte, B., Costas, J., Pino, R. and De la Fuente, D.

, 2016).25In many situations, our assumptions about known quatity and zero or constant delay are not valid. Demand and delay are often variable quantities, so we know best only their probability distribution. If we assume that the question and the delay are random variables, the analysis of the inventory management problem will become very complex.

It has been found, however, that reasonably good situations can be obtained for many practical inventory management problems by assuming that the delay is a known constant.2.6 Inventory management techniquesInventory management techniques are extremely critical for business operations because their success and cost decrease of the firm’s use require improved supply chain performance and information to the workers (Lambert, 2008). These procedures are basic and information in them is profoundly desirable in this way, managers and obtainment staff need to be able to apply the procedures for the advantage of the organization (Fellows and Rottger, 2005).Wild (2002) suggests, proper warehousing of stock so that when products items are requested, they are kept at the warehouse for the least time possible minimizing holding cost of stock. Consequently, other operational costs may increase inventory management costs.

The way an organization is able to maintain its costs at low levels the way better it is for the year end profits (Palevich, (2012), Wisner, Tan and Leong (2011)). Organizations purchase and sell their stock; there continuously arises balance at the end of the year which have to be be carried over to the next year. Once an organization realizes this, it can create online stock management tool to monitor its stock information by breaking it down into groups by26connecting the categories with its clients. Since organizations works differently in numerous fields, the stock can be classifies by either seasons or financial year conclusion of your most critical clients thus, request forecasting got to be employed to have an proficient supply chain (Poiger, 2010).2.6.

1 Re-Order LevelAs organization endeavor to achieve effectiveness, they should be able to understand their ReOrder Levels (ROL) which empowers them know when to order and when not to order. This may be accomplished through the use of quantitative strategies which require proper inventory management (Apte, 2010). Re-Order level is critical for Aref Contractor Company to attain optimal efficiency and be successful leading to high supply chain performance and client satisfaction, at that point they need to have two reorder levels one that’s normal whereas the other is an emergency one in case of disaster (Beamon and Kotleba, 2006).2.

6.2 Economic Order QuantityBachetti, Plebani, Saccani and Syntetos (2010) contends that inventory management got to be organized in a consistent way so that the organization can be able to know when to order and how much to order. This will only be accomplished through the Economic Order Amount (EOQ) computation. Economic order amount enables organization to plan their stock replenishment on a timely basis such as month to month, quarterly, half yearly or yearly basis. By so doing, it empowers firms to have minimal storage costs or zero within their warehouses since stock is coming in and going out instantly. In this way, this tends towards the just in time concept of supply chain management received by Toyota motor Organization in Japan which helps in having zero holding costs, (Schonberger, 2008).

In this way, as27organizations try to progress on the stock management, the Economic Order Quantity (EOQ) and Re-order Point (ROP) are critical tools that organizations can use to guarantee that stock supply does not hit a stock out as explained by Gonzalez and Gonzalez (2010). Over time, organizations have been keeping up their stock in a haphazard way which has required a change within the way firms conduct their business. Stock outs have been experienced adversely leading to client dissatisfaction hence; firms are changing their approach to be able to stay important by employing Economic Order Quantity (EOQ) and Re-order Point (ROP) for client satisfaction.The derivation of the basic EOQ model (Quantity of economic order) is quite simple in a situation28Figure 2


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