Inventory Management: - Submitted To
Inventory Management: - Submitted To
Inventory Management: - Submitted To
Submitted By: Tufail Khan Subject: Production and Operation Management MBA(2nd sem.)
What Is Inventory?
Stock of items kept to meet future demand Purpose of inventory management
how many units to order when to order
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
Functions of Inventory
1. To decouple or separate various parts of the production process 2. To decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers 3. To take advantage of quantity discounts 4. To hedge against inflation
Types of Inventory
Raw material
Purchased but not processed
Work-in-process
Undergone some change but not completed A function of cycle time for a product
Maintenance/repair/operating (MRO)
Necessary to keep machinery and processes productive
Finished goods
Completed product awaiting shipment
Independent
Demand for items used by external customers Cars, appliances, computers, and houses are examples of independent demand inventory
Inventory Costs
Carrying cost
Inventory Measures
Weeks of Supply
Ford: 3.51 weeks Sears: 9.2 weeks