1. Introduction to managing inventory

Inventory is defined as assets that are intended for sale and service. The objective of inventory management is to meet customer needs while keeping inventory costs at reasonable level to produce a profit for the firm (Mercado, 2007). It usually involves stock replenish time and quantity of orders between customer demand and the amount of inventory they keep. It has also strike to control tight inventory level together with its associated cost ; holding costs, ordering costs and shortage costs which would unnecessarily tie up in working capital which impact cash flow and operation .

1.1 Manufacturing Organization
Manufacturing inventory is a list of the goods, parts or materials required to perform the manufacturing process in stock and available for use. Inventory is a cost until the product is sold in exchange for cash. Inventory management also decides when stock should be replenished and the quantity of orders.Some manufacturers maintain their procurement control parameter to support manufacturing process by using MRPI, MRPII,ERP and DRP which calculate time phased requirement. 1.2 Service Organization
Service inventory depend on a service context can form as different type due to intangible nature of service.Service inventory management is all process steps that are completed prior to the customer’s
Indeed, this is clearly true of most. On the contrast, most manufacturing operations, there are inventories between each stage of production, and a finished goods inventory which can be increased or decreased as demand fluctuates. In manufacturing operation, one aspect of Lean is to minimize inventory and floor space requirements. There would be a considerable lag between production and consumption. In a Service operation, there are no lags as there are in