Professional Documents
Culture Documents
SYSTEM
A Presentation By_
Pratik Tamgadge
1
6/10/2012
Contents
• What is Inventory for organization?
• Types of Inventories
6/10/2012 2
What is Inventory?
• Inventory is stock of items held to meet future
demand.
Firm or Organization
WorkWork
in Work
inRaw
in
progress
progress
progress C
material C
u
u
s
Raw Work in s
Finished t
material progress t
goods o
o
m
Work
Work
Work
in
Work
Work
in inin in m
e
progress
progress
progress
progress
progress e
r
r
6/10/2012 4
Types of Inventories contd.
• Finished Goods
– Completely manufactured products ready for sale.
• Supplied Goods
– Office and plant cleaning materials not directly enter production but
are necessary for production process and do not involve significant
investment.
6/10/2012 5
What is Inventory Management?
7/10/2012 6
Tasks in Inventory
Management
• Track inventory
– To look after the amount of inventory i.e. stock coming into the
business.
• When to order?
– Specify the duration of getting the inventory.
6/10/2012 7
Inventory Management flow cycle
6/10/2012 8
Advantages of Inventory Management
7/10/2012 10
Basic Economic Order Quantity
model
7/10/2012 11
Production Order Quantity model
7/10/2012 12
Probabilistic Models and Safety
Stock
• Used when demand of inventory is not constant or
certain.
• Time
– The time lags present in the supply chain, from supplier
to user at every stage, requires that you maintain
certain amounts of inventory to use in this lead time.
• Variations
– Inventory is to be maintained for consumption during
'variations in lead time'.
7/10/2012 14
Reasons for keeping stock contd.
• Uncertainty
– Inventories are maintained as buffers to meet
uncertainties in demand, supply and movements of
goods.
• Economies of scale
– Ideal condition of "one unit at a time at a place, where
a user needs it, when he needs it" principle tends to
incur lots of costs in terms of logistics. So bulk buying,
movement and storing brings in economies of scale,
thus inventory.
7/10/2012 15
7/10/2012 16