inventory mgmt 7

8/14/2019 Inventory Mgmt 7

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Presented by

Amit Jaglan

Manish Vats

Neeraj BalaSakshi Vats


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Inventory & Inventory management

Purpose of inventory

Opposing views of inventories

Nature of Inventories

Inventory Systems

Inventory Classifications Models

Conclusion

OvervieOvervie


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stock of goods, commodities, or other economic resources

held by a firm at a particular time

for their future production requirements and

for their future demands.

assists organizations

in minimizing their inventory costwithout compromising on their ability to respond quickly to customerdemand.

InventoInvento

InventoryInventory


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Inventory management is concerned with the planning,implementation and control of the movement of physical objects andassociated information in general.

supply chain managementfocuses on the ultimate customer,who creates the demand, which in turn supports the existence of the

supply chain to provide the customer with the product.

INVENTORY MANAGEMANT AND SUPPLYINVENTORY MANAGEMANT AND SUPPLYCHAIN MANAGEMENTCHAIN MANAGEMENT


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Raw material

Semi finished goods

Finished goods

TYPES OFTYPES OF


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Smooth production

Better service to customers

Protection against Business uncertainties

Quantity discounts advantage

Purpose ofPurpose of


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Why We Want to Hold Inventories

Why We Not Want to Hold Inventories

Opposing Views ofOpposing Views of


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Improve customer service

Reduce certain costs

Contribute to the efficient and effective

operation of the production system

Why We Want to HoldWhy We Want to Hold

Visibility &Intelligence


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Certain costs increase such ascarrying costscost of diluted return on investment

capacity costslarge-lot quality costcost of production problems

Why We Do Not Want toWhy We Do Not Want toHold InventoriesHold Inventories


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Two Fundamental Inventory Decisions

Independent Demand Inventory Systems

Dependent Demand Inventory Systems

Inventory Costs

Nature ofNature of


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How much to order of each materialwhen orders are placed with eitheroutside suppliers or production

departments within organizationsWhen to place the orders

Two Fundamental InventoryTwo Fundamental InventoryDecisionsDecisions


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Demand for an item carried in inventoryis independent of the demand for anyother item in inventory

Finished goods inventory is an exampleDemands are estimated from forecasts

and/or customer orders

Independent DemandIndependent DemandInventory SystemsInventory Systems


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B(4) C(2)

D(2) E(1) D(3) F(2)

Dependent Demand(components)

A

Independent

Independent Vs. DependantIndependent Vs. Dependant


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Purchase Cost

Carrying Cost

Ordering Cost

Stock-out Cost

InventoryInventory


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Single period Inventory System

Multi- period Inventory System

Fixed order quantity system(Q-system)

Fixed order period system(p-system)

InventoryInventory


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IDLE STATEWaiting for demand

DEMAND OCCURSUnits withdrawn

from inventory orback ordered

COMPUTIVE INVENTORYPOSITION

Position=on hand +onorder-back order

Is position

p reorderpoint

Issue an orderfor exactly Q

units

yesno

IDLE STATEWaiting for demand

COMPUTIVE INVENTORYPOSITION

Position=on hand +onorder-back order

Compute order quantity tobring inventory upto

required level

Issue an order for

number of unitsneeded

DEMAND OCCURSUnits withdrawnfrom inventory

Hasreviewtime

arrived

no

yes


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Annual Cost $Annual Cost $

Order uantitOrder uantit

MinimumMinimum

Total AnnualTotal Annual

Stocking CostsStocking Costs

AnnualAnnualCarr inCarrying

AnnualAnnualOrderin CostsOrderin Costs

Total AnnualTotal AnnualStockin CostsStockin Costs

SmallerSmaller Lar erLar er

Lowe

r

Lowe

r

Hiher

Hiher

EOEO

alancing Carrying against Ordering Cosalancing Carrying against Ordering Cos


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ABC classification

VED Classification

FSND Classification

Inventory classificationInventory classification


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ThankThankThankThank

inventory mgmt 7

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