Warehouse & Inventory Management

Report on
Inventory and warehouse management

Report on

Inventory and warehouse Management

Submitted By
Muhammad Amir Sohail

Roll NO 59

Submitted To
Sir Sohail Ayaz

Department of School of Economic

BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN

Warehousing:-

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 companys 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

locations.
To ensure least logistics cost for a desired level of customer service.
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Warehouse Operating Principles:

Three Principles are:

1) Design criteria:

a) Number of stories in the facility,

b) Height utilization,
c) Product flow
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Warehouse Operating
Principles: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 strategies: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
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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 industry.
3) operating flexibility: Refers to the ability to adjust
internal policies and procedures to meet product and
customer needs.

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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.

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INVENTORY MANAGEMENT
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Definitions:

InventoryA physical resource that a firm holds in stock with the intent

of selling it or transforming it into a more valuable state.

Inventory SystemA 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

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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
customers

3.

To take advantage of quantity discounts

4.

To hedge against inflation

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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

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The Material Flow Cycle

Cycle time
95%
Input

Wait for
inspection

Wait to
be moved

Move Wait in queue Setup

time
for operator
time

5%
Run
time

Output

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Inventory Management
How inventory items can be classified?
How accurate inventory records can be
maintained?

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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

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Categories of
Inventory

Cycle stock

Safety stock

Pipeline

Anticipation
inventory

stock

Dead stock
Decoupling stock

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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).

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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 .

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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

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