INVENTORY POLICY: It consists of guidelines concerning what to purchase or manufacture, when to take action and in what quantity. It also deals with the inventory positioning and placements in plants and distribution centers. E.g some plants may maintain stock at a plant and hence postpone the inventory positioning. The second inventory policy element concerns inventory management strategy. One approach is to manage inventory at each distribution center independently. The other extreme deals with inventory interdependence across distribution sites by managing inventory centrally. Centralized inventory management requires more coordination and communication.
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