Inventory management
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This document discusses inventory management. It defines inventory as physical resources held in stock for sale or transformation, and defines an inventory system as policies controlling inventory levels and replenishment. It notes that inventory includes raw materials, works in progress, finished goods, and spare parts. Reasons for holding inventory include improving customer service, purchasing and production efficiencies, transportation savings, and hedging against disruptions. The objectives of inventory control are to maximize customer service while minimizing costs. Design considerations include what and where to inventory as well as tracking, order quantities, and timing.
Inventory management
- 1. Inventory Management By- CHAMWAD S L ROLL NO.11
- 2. Definitions Inventory-A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state. Inventory System- A set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be
- 3. Inventory Def. - A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state. Raw Materials Works-in-Process Finished Goods Maintenance, Repair and Operating (MRO)
- 4. Reasons for Inventories:- Improve customer service Economies of purchasing Economies of production Transportation savings Hedge against future Unplanned shocks (labor strikes, natural disasters, surges in demand, etc.) To maintain independence of supply chain
- 5. Nature of Inventory: Adding Value through Inventory Quality - inventory can be a “buffer” against poor quality; conversely, low inventory levels may force high quality Speed - location of inventory has gigantic effect on speed Flexibility - location, level of anticipatory inventory both have effects Cost - direct: purchasing, delivery, manufacturing indirect: holding, stock out. HR systems may promote this-3 year postings
- 6. Objectives of Inventory Control Maximize the level of customer service by avoiding under stocking. Promote efficiency in production and purchasing by minimizing the cost of providing an adequate level of customer service.
- 7. Design of Inventory Mgmt. Systems: Macro Issues Need for Finished Goods Inventories ◦ Need to satisfy internal or external customers? ◦ Can someone else in the value chain carry the inventory? Ownership of Inventories Specific Contents of Inventories Locations of Inventories Tracking
- 8. Design of Inventory Mgmt. Systems: Micro Issues Order Quantity Economic Order Quantity Order Timing Reorder Point
- 9. Zero Inventory Reducing amounts of raw materials and purchased parts and subassemblies by having suppliers deliver them directly. Reducing the amount of works-in process by using just-in-time production. Reducing the amount of finished goods by shipping to markets as soon
- 10. Inventory Positions in the Supply Chain Raw Materials Works in Process Finished Goods Finished Goods in Field