Management of Stock/ Inventory Group Members Tushar Kaushik – 107 Vikram Singh – 110 Veeraj Chavan – 112 Yogesh Waghela - 116 Yugandhar Pradhan – 117
IntroductionInventory Inventory is detailed, itemized list, report, or record of things in ones possession, especially a periodic survey of all goods and materials in stockInventory Management Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials
Reasons for keeping Inventory Time Uncertainty Economies of scale
Inventory proportionality The use of inventory proportionality is thought to have been inspired by Japanese just-in-time parts inventory management made famous by Toyota Motors in the 1980s Inventory proportionality is the goal of demand-driven inventory management
Purpose The primary optimal outcome is to have the same number of days (or hours, etc.) worth of inventory on hand across all products so that the time of run out of all products would be simultaneous The secondary goal of inventory proportionality is inventory minimization
Application The technique of inventory proportionality is most appropriate for inventories that remain unseen by the consumer It is opposite to "keep full" systems and differentiated from the "trigger point" systems Inventory proportionality is used effectively by just-in-time manufacturing processes and retail applications where the product is hidden from view
High Level Inventory ManagementHigh-level financial inventory has two basic formulae, which relate to the accounting period: Cost of Beginning Inventory at the start of the period + inventory purchases within the period + cost of production within the period = cost of goods available Cost of goods available − cost of ending inventory at the end of the period = cost of goods sold The benefit of these formulae is that the first absorbs all overheads of production and raw material costs into a value of inventory for reporting. The second formula then creates the new start point for the next period and gives a figure to be subtracted from the sales price to determine some form of sales-margin figure.
Accounting for Inventory Financial accounting Role of inventory accounting FIFO vs. LIFO accounting Standard cost accounting Theory of constraints cost accounting
Inventory and Supply Chain Management Bullwhip effect demand information is distorted as it moves away from the end-use customer higher safety stock inventories to are stored to compensate Seasonal or cyclical demand Inventory provides independence from vendors Take advantage of price discounts Inventory provides independence between stages and avoids work stop-pages 12-13.
Inventory and Supply Chain Management Bullwhip effect demand information is distorted as it moves away from the end-use customer higher safety stock inventories to are stored to compensate Seasonal or cyclical demand Inventory provides independence from vendors Take advantage of price discounts Inventory provides independence between stages and avoids work stop-pages
Two Forms of DemandDependent Demand for items used to produce final products Tires stored at a Goodyear plant are an example of a dependent demand itemIndependent Demand for items used by external customers Cars, appliances, computers, and houses are examples of independent demand inventory 12-15
Inventory and QualityManagement Customers usually perceive quality service as availability of goods they want when they want them Inventory must be sufficient to provide high- quality customer service in TQM12-16
Inventory and Quality Management Customers usually perceive quality service as availability of goods they want when they want them Inventory must be sufficient to provide high-quality customer service in TQM
Inventory Control SystemsContinuous system (fixed-order- quantity) constant amount ordered when inventory declines to predetermined levelPeriodic system (fixed-time- period) order placed for variable amount after fixed passage of time12-18
Special Terms Stock Keeping Unit (SKU) is a unique combination of all the components that are assembled into the purchasable item. Therefore, any change in the packaging or product is a new SKU. This level of detailed specification assists in managing inventory. Stock out means running out of the inventory of an SKU. "New old stock" (sometimes abbreviated NOS) is a term used in business to refer to merchandise being offered for sale that was manufactured long ago but that has never been used. Such merchandise may not be produced anymore, and the new old stock may represent the only market source of a particular item at the present time.