Management Sample Paper on Warehousing And Inventory Management


Inventory management has more to do with stock management. Inventory management aims at smooth flow of goods and preventing stock-outs by monitoring amounts of inventory, providing information about inventory and determining time of inventory order placement. Therefore, for inventory management systems to work, information remains mandatory. This paper seek to give a discussion of information in relation to how it may replace inventory in strategic inventory management, but first the paper will give an in depth look of information and its source.

Data and information

Data is a group of non-random raw facts, symbols inform of images, text, objects, actions and voices representing quantities. Data can be equated to raw materials that neither interrelate nor aid in decision making. On the other hand information is derived from processed data; therefore, information is a product of data processing and an interrelated data. Information can be equated to finished goods as an output of processing raw materials. Information provides value in decision making and brings clarity by creating response to some actions. According to (Burgin 2010, pg. 9) information is a processed data and is meaningful to the recipients in perceived or real value in regard to prevailing decision making process or perspective action.

During inventory management, accurate information remains prerequisite in the prevention of stock running out or in deciding when to place orders. Misplaced or invalid information will result in both stock running out during un-anticipated times of placing order too early or too late and therefore having a direct negative consequence to the business. Information is therefore, a critical resource to any organization inventory management, its importance may supersede that of inventory as the information management may be equated to managing the future. Information can be regarded as knowledge derived from actual facts place in the right context for a sole purpose of reducing uncertainties.

Characteristics of Information

Good quality of information parameters can sometimes be difficult to decide since such qualities could to some extent be regarded as subjective evaluation. Information quality or characteristic in this context will refer to its fairness for use in decision making or its reliability, good information creates value during its use. The following are some of the information characteristics; good information should be relevant and accurate for its purpose, complete enough for a problem at hand, reliable and targets the right person. Good information should also be communicated at the right time with the right level of details coming from the right channel and understood by the person being targeted by the information (Heldman 2001, pg. 56-59). The following are further details of information characteristics in relation to organization’s information for decision making and inventory management.

Information should be timely, timeliness in the context of inventory management means that information should reach the recipient within a stipulated time frame. Information regarding stock levels running low at the warehouse should reach the concerned managers in time for them to place before stock runs out (Bateman & Snell 2013, pg 112-14). Information reaching the mangers too early or too late will result in losses and non effective decisions; therefore, for effective decision making regarding inventory management, information should reach the concerned decision makers at the right time, i.e. the decision maker must get the information when it is needed since delays have shown to reduce the value of information. Further characteristic of information in terms of timeliness remains to that information should be current, i.e. up-to-date.

Quality information should be accurate. Accurate information means that it should be free from errors and mistakes, accuracy of information also means free from biasness. Wrong information given to an inventory manager would lead to wrong decision making that may result into severe consequences like over stocking or goods expiring at the warehouse. Since most manager depend on decisions supplied by management information systems, all inventory managers need accurate information for their day to day dispatching of duties.

For information to serve its purpose, it must be relevant and adequate. Information is regarded as relevant if it supplies an inventory manager with answers regarding why, what, where, who and why one thing concerning stocks in the warehouse does behave in a particular manner. Additionally, the management information system should provide useful information to inventory managers and that the information should facilitate them make informed decision. Adequate information is that which is sufficient in quantity (Elkin & Law 2000, pg 37-40). Information provided to an inventory manager for decision making should be sufficient for such kinds of decisions. Reports from management information systems should not be inadequate leading to difficult situations to the manager. Provision of inadequate inventory information would result in to crisis, information overload leading chaos in inventory management (Whitman & Mattord 2003, pg.11).

Good information should be reliable; reliability in this context has to do with truth and objectivity with which information is presented. An inventory manager will only use information confidently if they are sure of the information objectivity and reliability. When seeking for information about stock levels at the warehouse, inventory managers will head straight to their inventory management systems. The manager will be reasonably confident that the information provided by the organization’s system is reliable and objective. The system in place should have been tested and found to give reliable information and the manager can be reasonably sure that at any time the system will be bound to provide reliable information. This compared to information derived from an external source, where anybody can make changes to the information, unless the manager trust the source of the information, such information will not be reliable.

Information should be complete and containing all the required details. Incomplete information may not be useful for decision making. If an inventory manager receives information about the cost of supplying fleet of cars for resale, and the information come without the inclusion of maintenance and servicing cost, then the costing based on the provided information will be incomplete and considerably underestimated (Martin 1995, pg.210). In essence, all the information needed to make certain decisions should be availed; however, this does not happen regularly in most organizations (Waters 1992, pg. 198). Most information given to inventory managers is usually incomplete and to meet their needs of the situation, managers will often have to gather additional information from a variety of sources. Decision making requires information whose level of consciousness and details are high (McLucas 2003, pg. 209-210). Information should be short enough to server its purpose. It is a common practice to summarize financial information by use of charts and graphs. It is arguable that graphs are more succinct than table of figures since graphs and charts have no extraneous information; therefore, the use of graphs and charts facilitate a trade off between level of consciousness and details.


Difference between Information and Data

It is common knowledge that data and information have always been used to mean the same thing; however, there exist a difference between the two; data represents raw facts and statistics used for analysis or reference while information is a processed data and knowledge derived from experiments, studies or instructions. Data is made up of characters, numbers, images and symbols and that can be processed by a machine like a computer while information is intelligible communication. Data must be interpreted by a machine or human to derive meaning but information comes already with meaning. While data is a representation of information, information is interpreted data and forms a kind of knowledge that can be exchanged among people about concepts, thing and facts (Bommel 2005, pg. 23-25).

Cost of Information

It is a fact that information should be availed within a range of a set cost and this could vary depending on situation. If the cost of obtaining information is high, an organization may opt to seek other less comprehensive information (Kleinbaum 1994, pg 98-102). For example if an organization seeks to commission a survey on the cost of keeping a product in a warehouse, the survey could cost more that the anticipated proceeds from the product. In such a case the organization will have to seek less costly sources of information if at all other sources exist. If no other source of information exists, the organization will have no other option, but to use the costly information and in such a case the information will be of higher value than the inventory.



Bullwhip Effect

Bullwhip or whiplash effect is an occurrence in supply chain where orders sent to supplier creates variances up the supply chain. In unmanaged supply chain, variability in demand tends to increase as one move up the chain supply. Changes in consumer demand may lead to large variations in the order placement upstream resulting in the whole supply chain network oscillating in large swings. Variances caused by bullwhip effect can interrupt the smooth flow of supply chain process since each link in the chain will under or overestimate the product demand leading to exaggerated fluctuations.

Bullwhip effect can be caused by lack of communication in the supply chain, failure to place orders in an effort to reduce inventory, mismanagement of material and information and in coordination in the supply chain. The problem of bullwhip effect can be addressed by management of information in the chain, and addressing demand visibility by provision of to point of sale data.


Inventory management has two parts: physical aspect concerned with the storage of stock, and the information aspect. Inventory management visibility provides insight through information concerning stock levels and order placement. Information in inventory management remains critical in ensuring “Right information to enable right product at right time at right place for a cost-effective decision making and efficient product or service delivery.”  A key advantage to having right information in inventory management is that, information can replace inventory resulting in agile and lean supply chain. This paper identified the importance of information in inventory management as a way of reducing costs. It also differentiated between data and information.





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