7 Apr 2022


Inventory Management

Format: APA

Academic level: University

Paper type: Research Paper

Words: 1685

Pages: 6

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Management of Inventory is the art of overseeing and managing the processes in a company including ordering, storage, and the application of components that are used by the firm in the production of the items being sold. It is a process that also involves the managing of the finished goods that are ready for sale. Inventory in business is a key asset and a representation of an investment tied up until items are sold. In the busy economic world, many businesses incur costs in their storage, tracking, and financial issues because the mismanagement of the inventory leads to a shortage. Successfully created Inventory management systems ensure the availability of items when needed and also ensure that not too much of the item or too little of it is purchased. Inventory management is an important exercise in the maintenance of the desired balance of stock in companies. No company would wish to lose sales as a result of not having sufficient inventory to fill an order. However, it has also been noted by experts that too much inventory can cause profit losses if a product can be damaged, can expire or can also get out of season. The theme of the paper will be to focus on inventory management in two service firms: Dollar General and Wal-Mart.

Types of Inventories

Dollar General is known to apply different types of inventories and uses raw materials, maintenance, repairs, work-in-process and finished goods in the inventories management systems. The raw materials are the items supplied by vendors to the firm, and these items include no additional labor by the receiving firms. The work-in-progress implies that the products are in various stages of completion in the production. Maintenance and repairs refer to those items that are needed to complete an operational task. These items are that a firm needs throughout the daily operations. The finished products are these goods that are fully processed and needs to enter the distribution route (Frederick, 2011).Wal-Mart resembles Dollar General regarding these inventories involved as the company also employs completed goods inventories, work-in-process, raw materials, and supplies ( Müller, 2011 ). Considering the contexts of inventory traits, the two firms are found to have resembling traits as they all entail the attribute of the Stock-Keeping Unit(SKU), meaning various items are kept in different locations. 

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The two firms have both independent and dependent demand characteristics. Regarding dependent demand, it is where the item does not rely on other items to be able to be forecast. Dependent demands do not have to be forecasted as the independent desires (Goetz & Swaminathan, 2006). Both firms have been seen to have stock out as a trait. Stock out is a case where the firm lacks items needed by a consumer and it usually leads to a back request or a lost sale. A back request or order is where a client decides to wait for the good to be brought in stock, and they usually come as costly elements for a firm. If a customer goes elsewhere, the firm loses the sale and also may lose a customer to their competitor (Tully, 2015).

Integration of goods and service design concepts

Dollar General and Wal-Mart are service companies that offer appropriate goods and services. When a company has a convenient program for goods and services, they become reliable regarding customer service. Dollar General is an example of an excellent service setting such as the digital coupon. The initiative to offer online coupons is a sign to the customers that the company cares about giving the customer as much saving as they can offer. In that case, they can be able to use coupons from other manufacturers as well. These firms have a 24/7 consumer service, and if a client has an inquiry or an issue, they can meet them instantly to offer professional assistance. Wal-Mart has excellent goods and conceptual service ideas. Similar to Dollar General, Wal-Mart also has a section where one selects the goods they are interested in as they are arranged in an orderly manner in shelves. The business has more choices that the customers can select from and the way they wish the service to be. In a case where a customer has any inquiries, they get immediate assistance by visiting the customer service desk where they get instant answers, refund exchange, and load money to their cards among other services ( Bose, 2006).

Roles of Inventory

Inventory is remarkable in a business and can impact on the operations of a business in various ways. A bad inventory management system can affect the performance of a company because it can lead to poor customer service as well as poor planning and undefined cost effectiveness. Bad inventory management systems can also lead to poor customer service as there can be delays in getting products to a customer. Also, due to poor inventory management, they can receive a shipment earliest but will not have certain products that were not identified in the inventory. A customer can, in that case, come to buy the product that is not on the shelf, and they get disappointed. If proper inventory systems are in place and are well managed, the case could not have happened, and the customer could have been prevented from going to other businesses. If the two businesses would have planned before and had an extra stock of the items in case they ran short, they could have avoided disappointing the customer and also not making a profit. Bad inventory management can affect the businesses negatively and also keeps the store at a high risk of theft as there will be no good records to track the inflow of the goods from the shelf ( Müller, 2011 ). 

Different Types of Layouts

The four layout forms are “process layout, product layout, fixed-position arrangement and cellular design” ( Bose, 2006 ). A process layout is a layout that has a functional grouping of equipment engaged in similar work. Product arrangement is an arrangement that is founded on the operations sequence, meaning the arrangement depends on the type of daily activity flow in the store. Fixed-position is an arrangement that embraces the resources needed to develop goods and offer services. The cellular layout is where the model is not as per the functional attributes of the tool but a self-contained group of elements required in the production of a particular set of goods or services. Service companies such as Dollar General and Wal-Mart use these layouts to organize various works ( Muckstadt & Sapra, 2010 ). The fundamental trade-off at Dollar General between the product and process layout is regarding the degree of specialization versus flexibility. Services need to consider the demand and the range of kinds of services given, the extent of personalization of the service and the skills of workers. The layout at Wal-Mart is found to be less complex, and it is easier to find the things that one is looking for while discovering new things along the way. In the stock rooms for the two companies, all their products are coded in colors and numbers that make it easier for the staff to identify them (Tully, 2015)

Metrics to Evaluate Supply Chain

To be able to keep things running smoothly, the supply chain managers use many different matrices in analyzing the performance and in the identification of the techniques to enhance the design and operations of supply processes. The supply chain department often employs these simple matrices to be able to balance the items that a client needs and also define the internal supply chain functionality. The performance administration of the supply chain is essential for the provision of competitive edge in the market. Using a metric category, there needs to be reliability, responsiveness and a customer-related measure, among other measures. Dollar General employs a customer-related and supply chain efficiency measures and gives a survey of their clients on every receipt ( Keeley, 2013 ). The goal of the business is to get 25 people to take part in the survey, which is a challenge as not many people take the time to participate. Dollar General and Wal-Mart are businesses that aim at giving the best customer service, and thus, they are expected to ask their clients what they expect from their stores. The two companies have always been on top of their inventory management, and they conduct adjustments on a weekly basis. Thus, they often have to empty their shelves and see if they have any of the products anywhere else and make orders if there are none so that they comes the following week. These firms also get monthly reports on inventory operations, and this assures them of a well-organized inventory system. The biggest problem these companies are facing is theft considering that at the time of the adjustments, the shelves might be empty while the reports indicate that they have two items on these shelves. There is a need to devise a way that will eliminate the theft cases in their stores.

Improving inventory management

The inventor can be improved through maintaining an up-to-date accounting record. An accurate record of inventory on the inventory on hand is known to be essential in management and control of inventory. Businesses use their perpetual inventories to keep track of their records, and thus, they need to have an updated system. A physical count of inventory is an important measure for improving inventory management. Regardless of what inventory system Dollar General and Wal-Mart use and how it will keep the inventory records, a loss of inventory due to theft or breakages can go unnoticed. A physical count can assist in uncovering the possible differences between the amount of actual inventory available and the amount of inventory recorded. There should also be an efficient inventory management control that will help in making sure the quality of the new inventories and the ones in stock. Inadequate inventory control can result in businesses holding wrong lines of inventories ( Muckstadt & Sapra, 2010 )


Inventory management has been found to be a significant innovation in service and manufacturing companies. It is an innovation characterized by some advantages to a company including keeping track of the available stock. The innovation also makes sure the business has enough stock on the shelves. The art of managing an inventory also assures a company of excellent customer service where the customers can get assistance from the customer care team whenever they need any. Dollar General and Wal-Mart are service companies that have used inventory management approaches in their systems and have witnessed the associated benefits. The businesses have been able to keep good customer service and also managed their stock well, making goods available to customers at any time they need. Many businesses that have used inventory management, like Dollar General, have been displayed to have succeeded in one way or another. Managing inventory is an innovation that many businesses would like to embrace to be able to keep track of their businesses and maintain successful operations.


Bose, D. C. (2006).  Inventory management . New Delhi: Prentice Hall of India.

Frederick, D. (2011). Exempt Executives? Dollar General Store Managers' Embattled Quest For Overtime Pay Under The Fair Labor Standards ACT. University Of Pennsylvania Law Review, 160(1), 277-329.

Goetz, S. J., & Swaminathan, H. (2006). Wal-Mart and County-Wide Poverty. Social Science Quarterly (Wiley-Blackwell), 87(2), 211-226.

Keeley, L. (2013).  Ten types of innovation: The discipline of building breakthroughs . Hoboken, N.J: Wiley.

Muckstadt, J. A., &Sapra, A. (2010).  Principles of inventory management: When you are down to four, order more . New York: Springer.

Müller, M. (2011).  Essentials of inventory management . New York: AMACOM

Tully, S. (2015). HOW THE DOLLAR STORE WAR WAS WON. Fortune, 171(6), 88-99.

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