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Warehouse & Inventory Management

Presented By
M.Amir Sohail


“Storage or warehousing provides the place utility as

part of logistics for any business and along with
Transportation is a critical component of customer
service standards”.

Reasons for warehousing:-
 To support the company’s customer policy.

 To maintain a source of supply without interruptions.

 To achieve transportation economies.

 To support changing market conditions and sudden changes in demand.

 To support any JIT programs.

 To provide customers with the right mix of products at all times and all

 To ensure least logistics cost for a desired level of customer service.

Warehouse Operating Principles:

Three Principles are:

1) Design criteria:

a) Number of stories in the facility,

b) Height utilization,

c) Product flow
Warehouse Operating

2) Handling technology

a) Movement continuity,
b) Movement scale economies.

3) Storage plan

Warehouse Activities
• Receive goods

• Identify goods

• Dispatch goods to storage

• Hold goods

• Pick goods

• Dispatch the shipment

• Operate an information system

Types of warehouses:-

It includes:

1) Private warehouses,

2) Public warehouses,

3) Contract warehouses

The Warehouse location
1) Market positioned:
a) Order Cycle time
b) Transportation cost
c) Sensitivity of the product
d) Order sizes

2) Product positioned:
a) Perishability of the raw materials
b) Number of products in the product mix
c) Assortments ordered by the customers from the
product mix
d) Transportation consolidation rates
3) Intermediately positioned:
Benefits of warehousing:-

 Consolidation.

 Break bulk warehouse.

 Processing / Postponement.

 Stockpiling.

 Service benefits

Warehousing Strategy
Other qualitative factors that should be considered include:

1) presence synergies: Inventory located nearby in a

building that is clearly affiliated with the enterprise.

2) industry synergies: Refer to the operating benefits

of collocating with other firms serving the same

3) operating flexibility: Refers to the ability to adjust

internal policies and procedures to meet product and
customer needs. 11
4) location flexibility: Refers to the ability to quickly
adjust warehouse location and number in accordance
with seasonal or permanent demand changes.

5) scale economies: Refer to the ability to reduce

material-handling and storage through application of
advanced technologies.


 Inventory-
A physical resource that a firm holds in stock with the intent
of selling it or transforming it into a more valuable state.

 Inventory System-
A set of policies and controls that monitors levels of inventory
and determines what levels should be maintained, when stock
should be replenished, and how large orders should be

Functions of Inventory
1. To separate various parts of the production process

2. To decouple the firm from fluctuations in demand and

provide a stock of goods that will provide a selection for

3. To take advantage of quantity discounts

4. To hedge against inflation

Types of Inventory
 Raw material
Purchased 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 product awaiting shipment

The Material Flow Cycle
Cycle time

95% 5%

Input Wait for Wait to Move Wait in queue Setup Run Output
inspection be moved time for operator time time

Inventory Management

 How inventory items can be classified?

 How accurate inventory records can be


Why hold inventory?
• Improve customer service

• Transportation savings

• Hedge against future

• Unplanned shocks (labor strikes, natural disasters, surges in

demand, etc.)

• To maintain independence of supply chain

Categories of
Cycle stock Inventory Safety stock

Anticipation Pipeline
inventory stock

Dead stock

Decoupling stock

1. Cycle Stock :
Because of the economies of scale involved in production and
transportation it makes sense to produce and transport goods in

batches. The is called as cycle stock. 2. Safety stock :

It is a safeguard against the uncertainties of demand and supply.

3.Pipe line stock:

Since production and transportation activities take certain finite
time, firms need to carry pipeline or in transit stock. Pipeline stock
consist of good usually being worked upon (WIP) or being moved from
one location to another in the chain ( In transit Inventory).

4. Decoupling Stock:

Since it is not possible to carry out supply chain operation with

just one decision maker, the entire supply chain is usually divided into
various decision making unit, the demarcation of decision making unit
take place at both organizational and departmental boundaries, so it
is not uncommon for organizational to hold large inventories at
organizational as well as departmental level. This becomes decoupling
inventories. So that flexibility at each level can be made

5. Dead Stock:

It refers to that part of the stock , that remain dormant or non

moved over a long period of time .

6. Anticipation Stock :
It consist of stock accumulated in advance of expected peak in
sales or to take care of some special event that does not occur
on regular basis.

It is of two types
1. Seasonal Stock
2. Speculation Stock

Distribution of presentation

 Name Slide No Roll # NO

 Sohail Nadeem 3,4,5,6 15
 M. Amir Sohail 7,8,9 59
 Sirfraz Riaz 10,11,12 45
 Asim Iqbal 13,14,15 199
 M.Zeshan 16,17 135
 Malik Shahbaz 18,19 69
 M.Waqas Tariq 20,21,22 123
 M.Zahid 23,24 43
 Note : Please preparation every one own slide and Number
don change at the time of presentation