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Group MembersTushar Kaushik – 107Vikram Singh – 110Veeraj Chavan – 112Yogesh Waghela - 116Yugandhar Pradhan – 117Zeeshan Bakshi – 118
Management of Stock/ Inventory
IntroductionInventory
Inventory is detailed, itemized list, report, or record of things in one's possession, especially a periodic survey of all goods and materials in stock
Inventory Management
Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials
Types of Inventory/Stock
Buffer/safety stock
Cycle stock
De-coupling
Anticipation stock
Pipeline stock
Reasons for keeping Inventory Time
Uncertainty
Economies of scale
INVENTORY PROPORTIONALITY
Inventory proportionality
The use of inventory proportionality is thought to have been inspired by Japanese just-in-time parts inventory management made famous by Toyota Motors in the 1980s
Inventory proportionality is the goal of demand-driven inventory management
PurposeThe primary optimal outcome is to have the same number
of days' (or hours', etc.) worth of inventory on hand across all products so that the time of run out of all products would be simultaneous
The secondary goal of inventory proportionality is inventory minimization
ApplicationThe technique of inventory proportionality is most
appropriate for inventories that remain unseen by the consumer
It is opposite to "keep full" systems and differentiated from the "trigger point" systems
Inventory proportionality is used effectively by just-in-time manufacturing processes and retail applications where the product is hidden from view
High Level Inventory Management
High Level Inventory ManagementHigh-level financial inventory has two basic formulae, which relate to
the accounting period:
Cost of Beginning Inventory at the start of the period + inventory purchases within the period + cost of production within the period = cost of goods available
Cost of goods available − cost of ending inventory at the end of the period = cost of goods sold
The benefit of these formulae is that the first absorbs all overheads of production and raw material costs into a value of inventory for reporting. The second formula then creates the new start point for the next period and gives a figure to be subtracted from the sales price to determine some form of sales-margin figure.
Accounting for Inventory
Financial accounting
Role of inventory accounting
FIFO vs. LIFO accounting
Standard cost accounting
Theory of constraints cost accounting
.
12-13
Inventory and Supply Chain ManagementBullwhip effect
demand information is distorted as it moves away from the end-use customer
higher safety stock inventories to are stored to compensate
Seasonal or cyclical demandInventory provides independence from
vendorsTake advantage of price discountsInventory provides independence
between stages and avoids work stop-pages
Inventory and Supply Chain Management
Bullwhip effect demand information is distorted as it moves away from
the end-use customer higher safety stock inventories to are stored to
compensate
Seasonal or cyclical demand
Inventory provides independence from vendors
Take advantage of price discounts
Inventory provides independence between stages and avoids
work stop-pages
12-15
Two Forms of Demand
DependentDemand for items used to produce
final products Tires stored at a Goodyear plant are
an example of a dependent demand item
IndependentDemand for items used by external
customersCars, appliances, computers, and
houses are examples of independent demand inventory
12-16
Inventory and Quality ManagementCustomers usually perceive quality service
as availability of goods they want when they want them
Inventory must be sufficient to provide high-quality customer service in TQM
Inventory and Quality Management
Customers usually perceive quality service as availability of goods they want when they want them
Inventory must be sufficient to provide high-quality customer service in TQM
12-18
Inventory Control Systems
Continuous system (fixed-order-quantity)
constant amount ordered when inventory declines to predetermined level
Periodic system (fixed-time-period)
order placed for variable amount after fixed passage of time
Special Terms Stock Keeping Unit (SKU) is a unique combination of all the components
that are assembled into the purchasable item. Therefore, any change in the
packaging or product is a new SKU. This level of detailed specification
assists in managing inventory.
Stock out means running out of the inventory of an SKU.
"New old stock" (sometimes abbreviated NOS) is a term used in business
to refer to merchandise being offered for sale that was manufactured long
ago but that has never been used. Such merchandise may not be produced
anymore, and the new old stock may represent the only market source of a
particular item at the present time.