Logistics
Logistics
Logistics
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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.
ABOUT McDONALDS
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily.
Headquartered in the United States, the corporation was founded by businessman Ray Kroc in 1955 after he purchased the rights to a small hamburger chain operated by the eponymous Richard and Maurice McDonald
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.
Objectives of Inventory
Production Control Business cycle Up and down Balancing
Need of Inventory
Uncertainty of Demand Uncertainty in lead time Time lag in deliveries Seasonal demand Quantity Discounts Transport Future cost increase
Raw Materials
Works in Process
Finished Goods
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Copyright 2006 John Wiley & Sons, Inc.
Types of Inventory
Raw material Work-in-process (partially completed) products (WIP) Finished goods.
Q approach Economic Order Quantity P approach (s,S) approach Just in Time approach Continuous Replenishment
Fair share allocation approach Requirement planning approach Adaptive Logic approach
Response-based - replenish inventory with order sizes based on specific needs of each warehouse
What is JIT?????
An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. JIT is the opposite of JIC, or "just in case," in which companies carried large inventories in the event that demand spiked. The company must be able to predict demand for the product and how much inventory will be needed at what stages of production.
The other aspect of JIT is the drastic reduction in safety stock. JIT system allowed them to exploit the savings that were realized by holding less inventory.