Materi Supply Chain Management yang ter dapat pada Inventory Management

1. INVENTORY
MANAGEMENT
Introduction of Inventories in Supply Chain

2. STOCK
Types of stocks
Raw materials, which have arrived from suppliers and
are kept until needed for operations;
work in progress, which are units currently being
worked on; finished goods, which are waiting to be
shipped to customers.
spare parts, for machinery, equipment, etc.,
consumables, such as oil, paper, cleaners, etc.
Another less widely used classification of stock
describes its overall purpose:
- Cycle stock is the normal stock used during
operations.
- Safety stock is a reserve of materials that is held for
emergencies.

3. STOCKS IN THE SUPPLY CHAIN
observation suggests that the aggregate amount of stock
held in a number of locations is:
N2 = number of planned future facilities
N1 = number of existing facilities
AS(Ni) = aggregate stock with Ni facilities

4. WORKED EXAMPLE
• AJT Transport of Manchester is planning to increase its services to mainland
Europe. It currently has 12 depots with aggregate stock valued at £12 million and
plans to expand to 16 depots. With a carrying cost is 20 per cent of value a year,
what is the likely cost of this change?
We know that: N1 = 12 depots N2 = 16 depots AS(N1) =
£12 million
The additional depots will raise stock holding costs by:
(13.9 − 12) × 0.2 = 0.38 million or £380,000 a year

5. EFFECT OF STOCKS ON THE RETURN ON ASSETS

6. WORKED EXAMPLE
• CMJ Constructors Ltd. currently has sales of £20 million a year, with a stock level
of 25 per cent of sales. Annual holding cost for the stock is 20 per cent of value.
Operating costs (excluding the cost of stocks) are £15 million a year and other
assets are valued at £30 million. What is the current return on assets? How does
this change if stock levels are reduced to 20 per cent of sales?
Solution Taking costs over a year, the current position is:
- Cost of stock = amount of stock × holding cost = (£20 million × 0.25) × 0.2 = £1 million a year
- Total costs = operating cost + cost of stock = £15 million + £1 million = £16 million a year
- Profit = sales − total costs = £20 million − £16 million = £4 million a year
- Total assets = other assets + stock = £30 million + (£20 million × 0.25) = £35 million
- Return on assets = profit/total assets = £4 million/£35 million = 0.114 or 11.4%
If stock levels are reduced to 20 per cent of sales: Cost of stocks = (£20 million × 0.2) × 0.2 = £0.8 million year
- Total costs = £15 million + £0.8 million = £15.8 million a year
- Profit = £20 million − £15.8 million = £4.2 million a year
- Total assets = £30 million + (£20 million × 0.2) = £34 million
- Return on assets = £4.2 million/£34 million = 0.124 or 12.4% Reducing stocks gives lower operating costs,
higher profit and a significant increase in the return on assets.

7. DEPENDENT AND INDEPENDENT DEMAND
INVENTORIES
• Dependent demand
Dependent demand is internal demand for parts based on demand of the final product
in which the part are used
• Independent demand
is the demand for a firm’s end products and has a demand pattern affected by trends,
seasonal patterns and general market conditions. For example, the demand for an all-
terrain vehicle is independent demand. Batteries, headlights, seals and gaskets originally
used in assembling the all-terrain vehicles are dependent demands; however, the
replacement batteries, headlights, seals and gaskets sold as service parts to the repair
shops or end users are independent demand items.

8. FOUR BROAD CATEGORIES OF INVENTORIES: RAW MATERIALS;
WORK-IN-PROCESS; FINISHED GOODS; AND MAINTENANCE,
REPAIR AND OPERATING (MRO) SUPPLIES.
• Raw materials are unprocessed purchased inputs or materials for manufacturing the
finished goods.
• Work-in-process (WIP) describes materials that are partially processed but not yet
ready for sales
• Finished goods are completed products ready for shipment. Finished goods
inventories are often kept to buffer against unexpected demand changes and in
anticipation of production process downtime; to ensure production economies when
the setup cost is very high; or to stabilize production rates, especially for seasonal
products
• Maintenance, repair and operating (MRO) supplies are materials and supplies used
when producing the products but are not parts of the products.

9. INVENTORY COSTS
• The bottom line of effective inventory management is to control inventory costs
and minimize stockouts. Inventory costs can be categorized in many ways: as
direct and indirect costs; fixed and variable costs; and order (or setup) and
holding (or carrying) costs
Direct costs are those that are directly traceable to the unit produced, such as the
amount of materials and labor used to produce a unit of the finished good.
Indirect costs are those that cannot be traced directly to the unit produced and
they are synonymous with manufacturing overhead. Maintenance, repair and
operating supplies; heating; lighting; buildings; equipment; and plant security are
examples of indirect costs..

10. INVENTORY INVESTMENT

11. RADIO FREQUENCY IDENTIFICATION