169x Filetype PPT File size 2.07 MB Source: faculty.fairfield.edu
Learning Objectives 2 Discuss basic inventory principles. Describe inventory management objectives. Explain the relevant inventory costs. Explain the ABC inventory classification model. Discuss inventory record accuracy. Calculate order quantities. Calculate the appropriate safety stock level. Describe the periodic review approach. Copyright © 2016 John Wiley & Sons, Inc. Types of Inventory 3 Inventory comes in many shapes/sizes: Raw materials – purchased items or extracted materials transformed into components or products Components – parts or subassemblies used in final product Work-in-process – items in process throughout the plant Finished goods – products sold to customers Distribution inventory – finished goods in the distribution system Copyright © 2016 John Wiley & Sons, Inc. Types of Inventory – cont’d 4 Copyright © 2016 John Wiley & Sons, Inc. How Manufacturers Use Inventory 5 1. Anticipation or seasonal inventory (for future demand) 2. Fluctuation Inventory or Safety (or Reserve) Stock: buffer demand fluctuations 3. Lot-size or cycle stock: take advantage of quantity discounts or purchasing efficiencies 4. Transportation or Pipeline inventory 5. Speculative or hedge inventory protects against some future event, e.g. labor strike, price increase 6. Maintenance, repair, and operating (MRO) inventories, e.g. hand tools, lubricants, supplies Copyright © 2016 John Wiley & Sons, Inc. Inventory in Service Organizations 6 Achieving good inventory control may require the following: Select, train and discipline personnel Maintain tight control over incoming shipments Maintain tight control over outgoing shipments Copyright © 2016 John Wiley & Sons, Inc.
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