1) How are inventory levels monitored? 2. Explain the purpose of ABC classification? 3. Discuss applications of the inventory models?

1. Inventory levels are monitored through four critical steps. First, items in the inventory are labelled and organized. Often, numbers are used to label different items in the inventory which make them easy to monitor. Second, a system for inventory management is made to record the items in the inventory. Electronic databases or physical documents that can be updated regularly are used to monitor inventory. Third, regular reviews of the inventory are carried out by physically counting the items to ensure that the records are consistent with the actual numbers in hand. Lastly, critical inventory metrics are tracked. Such metrics as the inventory turnover rate and inventory count accuracy help identify possible problems in the inventory.

2. ABC classification helps rank and group items based on their usefulness in achieving the set business goals. More importantly, the classification helps a business identify the 20% most useful items so that they are more closely monitored to ensure that business goals are achieved.

3. Inventory models are mathematical models that are used by businesses to manage their inventories. The applications of of inventory models include determining the levels of inventory that should be maintained in the course of the production process, determining the quantity of finished goods and raw materials to be under storage, managing the frequency in which raw materials are ordered, tracking the movement of raw materials and finished goods and ensuring that there is uninterrupted supply of goods to customers at all times.