INVENTORY MANAGEMENT (PPT)

2. WHAT IS INVENTORY?
 Inventory is the raw materials, component part, work-
in- process, or finished products that are held at a
location in the

3. Why do we care?
 At the macro
 Inventory is one of the biggest corporate assests
 Investment in inventory is currently over $1.25
trillion (u.s. department of commerce).
this figure accounts for almost 25% of GNP.
enormous potential for efficiency increase by
controlling inventories

4. How do you manage your
inventory?
 Soda
 Milk
 Toilet paper
 Gas
 Cereal
 cash

5. What do you consider
 Cost of not having it.
 Cost of going to the grocery or gas station cost of
drawing money
 Cost of holding and storing, lost interest.
 Price discounts
 How much you consume.
 Some safety against uncertainty

6. Types of inventory
 Raw material
purchased but not processed but not processed
 Work in process
undergone some change but not completed
a function of cycle time for a product
 Maintenance/ repair/operating (mro)
necessary to keep machinery and processes productive
 finished goods
completed products awaiting shipment

7. Benefits of inventory
 Hedge against uncertain demand
 Hedge against uncertain supply
 Economize on ordering costs
 Smoothing
to summarize, we build and keep inventory in
order to match supply and demand in the most cost
effective way.