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The IUP Journal of Operations Management :
Selection of Inventory Policies by TOPSIS.
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Inventory majorly contributes to total cost of a product. Profitability of any organization is directly dependent on its inventory level. Effective and efficient inventory policy is flexible to counter the dynamic customer demand. Selection of right inventory policy plays a vital role in Return on Investment of the organization. This paper presents a multi-criteria inventory selection model. A new Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) has been employed for selection of inventory policies, which hitherto has not been applied in literature. The developed model is user-friendly and can be applied for a large number of alternatives.

 
 

In the current scenario, products are available across the globe. Information technology plays a vital role in the globalization of Indian market. This situation produces pressure on the supply chain of any organization to meet global competition. Good Supply Chain Management reduces inventory in the chain to optimal level to increase customer service and satisfaction level (Cooper and Ellram, 1993). Inventory consumes the major portion of total sales revenues. It is essential for business processes to select optimal inventory policy which can provide high quality goods at least cost with minimum lead time and maximum customer satisfaction. Therefore, inventory policy selection has turned to be an important constituent of the organizational decision making. It is one of the most critical activities of purchase management which has gained great importance in the SCM. The automotive industry needs to synchronize various activities from purchase of raw materials and sub-assembly to activities involving original equipment manufacturers and infrastructure suppliers (Cassivi et al., 2000). Implementation of right inventory policy affects the profitability in the short term and competitiveness in the long term of any organization. The effective inventory policy is about two simple questions: When to place the order and how much to order. The selection of inventory policy is based on different interrelated criteria.

 
 

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