Operations Management OMI Session 1 Course overview and basics of inventory management Tuesday, 17” January 2023 Session plan © Today we will discuss = Know your instructor = Why OM II? = How to succeed in this course? = Course outline discussion ‘ Session plan ‘Textbook Reference books Case Evaluation components Assessment pattern = Feedback = Inventory Management ‘© Definition of the term inventory © Different types of inventoryKnow your instructor @ Email Id = bpriya@iimraipur.ac.in © Office number = Admin building, first floor, cabin number 103 2/20 Why OM II? ih o> ievrastaivs: A ho « \ PhAniN ei Operations-= wast, Berar Management «, to BP ah th = Es CONTROL PRODUCTION STRATEGY 3/20How to succeed in this course? “Tell me and | may forget. Show me and | might remember. Let me do it and 1 will understand.” — Confucius © Ask questions It is your fundamental right as a student to ask questions. Be quisitive © I need a response full of energy from all students. It gives me a good feeling and shows me you are here to learn new exciting things. That way | stay motivated. ‘© Sometimes | ask questions about previous lectures or something that you have already learnt. © Answer the question even if you think you are wrong (nobody loses point answering the question wrong). It will help you and other students to understand concepts much better. © Pay complete attention in the class. Do not miss classes. © Do not run after marks. Course outline Session plan Refer to the session plan in the course outlineCourse outline Textbook Heizer, J., Render, B., Munson, C., & Sachan, A. Operations management: sustainability and supply chain management, 12°” edition. Pearson ° ° Course outline Reference books Cachon, G., & Terwiesch, C. Matching supply with demand. McGraw Hill Chase, R. B., Jacobs, F. R., & Shanker, R. Operations and supply chain man- agement. Mcgraw Hill. Stevenson, W. J. Operat ns management. McGraw Hill Goldratt, E. M., & Cox, J. The goal: a process of ongoing improvement. Routledge Silver, E. A., Pyke, D. F., & Peterson, R. Inventory management and production planning and scheduling. John Wiley & Sons.Course outline Case Chopra, S. (2017). Six Sigma Quality at Flyrock Tires Management Cases. Product number: KEL028-PDF-ENG Kellogg School of 8/20 Course outline Evaluation components Specific evaluation components Quis (8) Mid term exam Project End term examination Class participation (Case discussion) Total Weightage planned 20% 20% 20% 30% 10% 100%Course outline Assessment pattern Specific cvaluation components Assessment pattern Quiz (3) MCQs Mid term exam Mix of theoretical and numerical questions Project Practice based, Group exercise End term examination Mix of theoretical and numerical questions Class participation (Case discussion) In class exercises, bonus questions Short, to the point responses are desired. 10/20 Feedback ny2Topic: Introduction to Inventory Management lextbook chapter: 12 ‘We want to turn our inventory faster than our people.” James Sinegal Tuesday, 17" January 2023 Inventory improvements at Zen Corporation Zens a global provider of specialized polymer materials, services, and solutions (such as metallic~ look vinyl used in home appliances, the soft-touch plastic on the handle of your razor, and medical-grade polymers for tubing). A few years ago, it appeared that the company might have to file for bankruptcy. Instead, the company recently generated $218 million of free cash flow and reduced its net debt by $223 ian. Du this time its stock share price has risen 580 percent. How did the company increase cash flow in such a short time, and during one of the worst economic recessions in history? Largely through supply chain management improvements in two areas: better manufacturing efficiencies and much improved inventory management practices. Inventory management improvements began when top managers formed a global inventory man- agement team. The team’s goal was to reduce inventory levels across businesses and regions while maintaining on-time delivery performance to customers, Major changes included consol- idating operations into a smaller number of facilities, identifying and focusing on the highest total cost items, working with key suppliers on delivery reliability, and adjusting inventory re- ‘order points. In one year, inventory management actions reduced inventory levels by $152 million—freeing up much needed cash while nearly doubling inventory turns. 13/20What is inventory? © Stock or store of goods @ Refers to stock of items held by a firm to meet demand © Manufacturing sector example? Car © Service sector example? Airline seats 14/20 Inventory composition by sectors of economy Breakdown of the total investment in inventories in the U.S. economy (2007) tia 74 snes, tm eet 5707 on "sf rt 207, “Taken fom: Nahmio,S,& Olsen, L. (2015). Production and operatins ara, Waveland Press 15/20Types of inventory © Raw material inventory ‘© Work-in-process (WIP) inventory © Maintenance, repair, and operating (MRO) supplies © Finished goods inventory 16/20 Types of inventory ... © Raw material inventory Items that are bought from suppliers to use in the production process. = Extent of processing? Purchased but not processed Oil Company 17/20Types of inventory ... © Work-in-process (WIP) inventory a It is also known as a semifinished good. = Inventory that is in the production process. = Goods that have been worked or partially assembled, but which are not yet finished goods. = Extent of processing? Undergone some change but are not completed = Example? For an EV manufacturer, vehicles midway through the assembly line are work in progress inventary. 18/20 Types of inventory ... © Maintenance, repair, and operating (MRO) supplies a Refers to the supplies necessary to keep machinery and processes running. a Extent of processing? Not processed = Example? For equipments based manufacturer, lubricants, equipment parts. se ee eS "Ty : = 19/20Types of inventory ... @ Finished goods inventory 1 Include goods that are produced fram raw materials, naw ready to sell and ship = For the automobile company, finished vehicles not yet sold or sent to dealers are finished goods stock. = Note that one firm's finished goods can be another @ Example? ITC paper rolls. 1 Extent of processing? Completely processed 5 & m's raw materials. 20/20