**3. Important factors in inventory control**

#### **3.1 Demand**

The number of units required per period is called demand. The demand pattern of a commodity may be either deterministic or probabilistic.

#### **3.2 Lead time**

The time gap between placing of an order and its actual arrival in the inventory is known as lead time. The inventory level of an item depends upon the length of its lead time.

#### **3.3 Deterioration**

A change or loss in the original value of the product is caused by certain factors that can worsen or damage the product. This is known as deterioration. It is common in goods such as vegetables, food products, dairy products, fruits, pharmaceutical products, etc. These items have less life time due to deterioration process.

Some products such as dried fish, usage of which may increase over time in an inventory level, or some products such as fast-growing animals by which its value in quantity to make better or increase their inventory level is known as amelioration. In stored items, the inventory may be affected by degrading or may be affected by upgrading their value to increase their size or increase their stock by both opposite activation such as deterioration or amelioration.

#### **3.4 Backlogging**

A certain quantity of products required more than the available stock, resulting in a customer demand that was not met. It causes a product shortage, and the cost associated with this shortage is known as the shortage cost.

Excess demand is sometimes met without causing inventory to be depleted before the next replenishment. Backlogging is the term for when a demand is met but not yet fulfilled. To prevent losing goodwill customers, the shortage is sometimes partially filled with higher administrative costs. This is referred to as partial backlogging.
