Managing inventory in the supply chain

Managing inventory in the supply chain

1. Inventory

   • An asset on the balance sheet and a variable expense on the income statement.
   • Impacts on return on investment (ROI)

2. GDP versus Inventory

   • Inventory as a percentage of commercial activity continues to decline

3. Batching economies

   • Procurement
   • Production
   • Transportation

4. Uncertainty

   • Demand
     • How much customers will buy
   • Offer
     • what is needed from the suppliers and the time it will take

5. Materials requirements planning

   • Supply of materials and components whose demand depends on the final product

6. Time/In-Transit

   • The inventory cost is associated with the period of time, the longer the time, the greater the cost

7. Importance in other functional areas

   • Finance
     • Money stopped
   • Marketing
     • Promotions
   • Manufacturing
     • Calculate the production needed

8. Types

   • Cycle inventory
   • Work in progress
   • Transit Inventory
   • Security inventory
   • Seasonal inventory
   • Anticipated inventory

9. Types of cost

   • Inventory maintenance
   • Order
   • Expected shortage
   • Inventory maintenance in transit

10. EOQ Model

    • Fixed quantity and interval model
    • Exchanging the cost of maintaining the inventory with the costs of the order and calculating a reordering point based on demand

11. Just-in-Time

    • Zero inventories
    • Short, consistent lead times
    • Small, frequent replenishment quantities
    • High quality, or zero defects

12. Distribution requirements planning

    • Forecast demand more precisely to develop production programs

13. ABC

    • Useful tool to improve the effectiveness of inventory management

14. VMI

    • It is used to manage the inventories of a company in the distribution centers of its customers

15. SKU

    • Code of letters and numbers that identify product characteristics