Operation Management

1. To stabilize production:The demand for an item fluctuates because of the number of factors, e.g., seasonality, production schedule etc. 2. To take advantage of price discounts:Usually the manufacturers offer discount for bulk buying and to gain this price advantage the materials is bought in bulk even though it is not required immediately. 3. To meet the demand during the replenishment period:The lead time for procurement of materials depends upon many factors like location of the source, demand supply condition, etc.