Inventory Management - Supply Chain Management

Determination of the best ordering policy in a manufacturing organisation

In a manufacturing organisation, procurement may have the legal responsibility to source external products and services. The procurement function has been growing in recent years as the budget has grown along with increased complexities of increased procurement volume and global location of vendors. 

Consider that the largest single vendor to the Ford Motor Company in the US is Blue Shield insurance. In manufacturing companies, an important aspect of procurement is the calculation of an economic order quantity (EOQ) or the calculation of a discount order quantity.