Issues in Inventory

Management
• Demand
• Economies of scale
• Transportation takes time
• DD and SS are uncertain
 Logistics Strategy
• Cost reduction( Reducing variable cost
related to the movement and storage of
goods)
• Capital cost reduction (minimizing the level
of investment in logistical framework)
• Service improvements
 Inventory carrying cost
• Capital (Inventory investments)
• Storage (warehouse rent, maintenance
charges)
• Inventory service cost (insurance and
Taxes)
• Obsolescence
• Damage and pilferage
• Relocation cost
 Logistical planning
Transportation
Inventory decisions
management
•Modes of
Customer
•Inventory levels transport
service
•Deployment of •Carrier routing/
goals
inventories scheduling
•Control methods •Shipment size/
consolidation

Location decision
Number, size and location of facilities
Assignments of stocking points to
sourcing points
Assignment of demand to stocking
points
 Facilities decision
• Direct shipment
• Warehousing
• Cross docking
 Supply chain management
Physically efficient supply
chain( functional goods)
• High capacity utilization
• Minimize inventory
• Lead times can be long
because dd is predictable
• Product design at ease
and to meet performance
standards
• Objective is to cut cost of
manufacturing
Market responsive supply
chain( innovative
products)
• Be ready to alter
production
• Keep buffer stock
• Must be short
• Design in modules
• Objective is to respond
quickly as demand
materializes
Traditional versus Modern
Logistics System
Customer Service