Inventory Management and Control

Inventory Management and Control

1. Is

   • Planning
   • Organizing
   • Controlling
   • Directing

2. Objectives

   • Description in the production schedule
   • To keep down capital investment in inventories

3. Effective Inventory Management

   • Sufficient stock
     • Raw material
     • Finished goods
   • Continiou supply
   • Minimizing the carrying cost

4. Pillars

   • Inventory Planning
     • Determine the optimy levels of inventory.
   • Inventory Control
     • Managing the integrity of the inventory
       • What to order
       • When to order
         • Reorder Point
           • SS= (Maximum Daily Usage – Average Daily Usage) * Lead Time
           • ROP= (Average Usage Per Unit * Lead Time) + Safety Stock
       • How much to order
         • Economic Order Quantity
       • How much to stock
   • Inventory Balancing
     • Supply demand management

5. Cost of Inventory

   • Different cost
     • Money
     • Maintenence
     • Space
   • Categories
     • Ordering Cost
     • Carrying Cost
     • Shortage Cost
   • Holding and ordering cost
     • Fluctuations in demand
       • Unreality in supply
         • Price protection
           • Predictability
             • Quantity discounts

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