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12 – 1
Inventory Management
Lecturer:
Mr. Max Galarza H. MsC.
grade 10
PowerPoint Slides by Yamileth
Estupiñan Segura.
12 – 2
What are Inventories?
 Finished product held for sale.
 Goods in warehouses.
 Work in process.
 Goods in transit.
 Staff hired to meet service needs.
 Any owned or financially controlled raw material,
work in process, and/or finished good or service
held in anticipation of a sale but not yet sold.
12 – 3
Inventory Management
Inventories are important to all types of organizations
 They have to be counted, paid for, used in
operations, used to satisfy customers, and
managed
 Too much inventory reduces profitability
 Too little inventory damages customer confidence
 Inventory trade-offs
12 – 4
ROLE OF INVENTORY IN THE SUPPLY CHAIN.
The inventory has main role in supply chain management like in a
warehouse, without inventory you cannot monitor outgoing or
incoming that will effect your Budget of warehousing.
12 – 5
WHERE ARE INVENTORIES?
12 – 6
Types of Inventories
Pipeline
Inventories in transit
Speculative
Goods purchased in anticipation of price increases
Regular/Cyclical/Seasonal
Inventories held to meet normal operating needs
Safety
Extra stocks held in anticipation of demand and lead time
uncertainties
12 – 7
REASONS FOR INVENTORIES
 Improve customer service
 Provides immediacy in product availability
 Encourage production, purchase, and
transportation economies
 Allows for long production runs
 Takes advantage of price-quantity discounts Allows for
transport economies from larger shipment sizes
 Act as a hedge against price changes
 Allows purchasing to take place under most favorable
price terms
12 – 8
REFERENCES
http://web.itu.edu.tr/kabak/dersler/MHN521E/
pdf/LM_w03_invertory_cyle_inv.pdf
http://www.wiley.com/legacy/wileychi/waters/
supp/Equations.pdf

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Inventory management

  • 1. 12 – 1 Inventory Management Lecturer: Mr. Max Galarza H. MsC. grade 10 PowerPoint Slides by Yamileth Estupiñan Segura.
  • 2. 12 – 2 What are Inventories?  Finished product held for sale.  Goods in warehouses.  Work in process.  Goods in transit.  Staff hired to meet service needs.  Any owned or financially controlled raw material, work in process, and/or finished good or service held in anticipation of a sale but not yet sold.
  • 3. 12 – 3 Inventory Management Inventories are important to all types of organizations  They have to be counted, paid for, used in operations, used to satisfy customers, and managed  Too much inventory reduces profitability  Too little inventory damages customer confidence  Inventory trade-offs
  • 4. 12 – 4 ROLE OF INVENTORY IN THE SUPPLY CHAIN. The inventory has main role in supply chain management like in a warehouse, without inventory you cannot monitor outgoing or incoming that will effect your Budget of warehousing.
  • 5. 12 – 5 WHERE ARE INVENTORIES?
  • 6. 12 – 6 Types of Inventories Pipeline Inventories in transit Speculative Goods purchased in anticipation of price increases Regular/Cyclical/Seasonal Inventories held to meet normal operating needs Safety Extra stocks held in anticipation of demand and lead time uncertainties
  • 7. 12 – 7 REASONS FOR INVENTORIES  Improve customer service  Provides immediacy in product availability  Encourage production, purchase, and transportation economies  Allows for long production runs  Takes advantage of price-quantity discounts Allows for transport economies from larger shipment sizes  Act as a hedge against price changes  Allows purchasing to take place under most favorable price terms