Scribd
Upload
299 views2 pages

Inventory Management Notes

The document outlines key concepts in inventory management, including inventory levels, order quantity, lead time, and costs associated with stockouts and carrying. It describes decision levels in inventory management (strategic, tactical, operational), various control techniques like EOQ and JIT, and methods for forecasting demand. Additionally, it discusses managing uncertainty in demand through safety stock and service levels, as well as aggregate planning strategies for production and workforce management.

Uploaded by

forworkonly8765
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
299 views2 pages

Inventory Management Notes

The document outlines key concepts in inventory management, including inventory levels, order quantity, lead time, and costs associated with stockouts and carrying. It describes decision levels in inventory management (strategic, tactical, operational), various control techniques like EOQ and JIT, and methods for forecasting demand. Additionally, it discusses managing uncertainty in demand through safety stock and service levels, as well as aggregate planning strategies for production and workforce management.

Uploaded by

forworkonly8765
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Inventory Management Decisions - Notes

Key Inventory Concepts


- Inventory Levels: Balancing stock to meet demand while minimizing excess.

- Order Quantity: Determining how much to order.

- Lead Time: Time between ordering and receiving inventory.

- Stockout Costs: Losses due to running out of stock.

- Carrying Costs: Storage, insurance, and depreciation expenses.

- Demand Variability: Adjusting inventory based on demand fluctuations.

Decision Levels in Inventory Management


1. Strategic Level: Long-term policies, supplier relationships, network design.

2. Tactical Level: Medium-term control models, production schedules.

3. Operational Level: Short-term ordering and stock replenishment.

Inventory Control Techniques


- Economic Order Quantity (EOQ): Optimizing order size to minimize total inventory costs.

- Reorder Point (ROP): Inventory level at which replenishment occurs.

- Just-In-Time (JIT): Ordering stock just before it is needed.

Inventory Classification Methods


- ABC Analysis: Categorizing inventory into high, medium, and low-value items.

- Vendor-Managed Inventory (VMI): Suppliers monitor and manage stock.

- FIFO & LIFO: First-in-first-out vs. last-in-first-out inventory usage.

Forecasting in Inventory Management


- Qualitative Methods: Expert judgment, market research.

- Quantitative Methods: Historical data analysis, regression.

- Demand Patterns: Identifying trends, seasonality, cyclic variations.

Independent & Dependent Demand


- Independent Demand: Customer-driven (e.g., finished goods). Managed using ROP,
Periodic Review, Continuous Review.
- Dependent Demand: Derived from other items (e.g., raw materials). Managed using MRP,
JIT.

Managing Uncertainty in Demand


- Safety Stock: Extra inventory for variability.

- Service Level: Probability of meeting demand without stockouts.

- Stockout Risk & Critical Ratio: Assessing risk and setting order levels.

Aggregate Planning
- Production Planning: Scheduling output.

- Workforce Scheduling: Managing labor needs.

- Inventory & Capacity Planning: Balancing stock levels with production capacity.

Strategies
- Chase Demand Strategy: Adjust production based on demand.

- Level Production Strategy: Steady output with inventory buffers.

You might also like