This document discusses inventory management systems and concepts. It describes continuous demand systems, which involve regular consistent demand, versus intermittent demand systems, where production is based on customer orders. It outlines the characteristics of each system. It also defines inventory, explains the need for inventory management including meeting demand variations and earning discounts. Finally, it discusses inventory processes and types, as well as the implications of effective inventory control methods.

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Presented By
Dr. Niraj Chaudahri
Assistant Professor,
Sanjivani College of Engineering ,
Dept.of MBA,
Kopargaon
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
www.sanjivanimba.org.in
203- Operation Management
Inventory Management

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Continuous demand system
• Continuous demand system is a practice of
inventory management which is a regular and
consistent demand for manufactured finished
product in market.
• When demand for the products is consistent in
market throughout the year, the company has to
maintain the stock level throughout the year in order
to meet the demand from the market.
• Ex:- FMCG products, food industry.

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Characteristics of Continuous demand system
• The flow of production is continuous
• The products are standardized
• The product are produced on predetermined
Quality standards.
• The products are produced in anticipation of
demand
• Standard routing and scheduling are
prepared.

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Intermittent demand system
• Intermittent means something that starts (initiate ) and
stops (halts) at irregular (unfixed) intervals (time gaps).
• In this system ,goods are produced based on customer
order .this goods are produced on a small scale and flow
of production is intermittent (irregular ) with large
varieties of products are produced, these product are of
different sizes and design. Therefore, this system is very
flexible.
• Ex:-boiler project, turbine

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Characteristics of Intermittent demand system
• The flow of production is not continuous.
• Wide varieties of product are produced.
• The volume of production is small.
• Produced of different types of products.
• Sequence of operation changing as per the
design of product.
• Quantity ,size, shape ,designed etc.depends
on customer order.

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Inventory management
• The world inventory basically means the total
goods and services that business hold in stock.
• The term inventory has wider meaning than the
term materials inventory includes stock of raw
material, work in progress, finished goods,
components and supplies
• Simply inventory management nothing but
stock management in industry.

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Inventory Management

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Inventory Management

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Classification of Inventory management
• Productive inventory
• Non-productive inventory
• In-process materials inventory
• Finished goods inventory
• Scrap , obsolete materials inventory

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Need of Inventory Management
• Meet variation in production demand
• Fulfill cyclical and seasonal demand
• Economics of scale in procurement
• Earn advantage of price increased and
quantity discount
• Reduced transit cost and transit times
• Long lead and high demand items need to be
held in inventory.

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Need of Inventory Management

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Inventory Process

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Types of inventory
• Seasonal
• Decoupling
• Cyclic inventory
• Pipeline inventory
• Safety inventory or safety stock

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Implication of inventory control method
• Protect from fluctuation in demand.
• Better service to customer.
• Continuity of production operations.
• Reduced the risk of loss.
• Minimizes administrative workload.
• Protect fluctuation in output .
• Effective use of working capital
• Check of loss of materials.
• Facilitates cost accounting activities.
• Avoiding duplication in ordering.