7/26/2019 Supply & Demand 10.ppt

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Slide 10.1

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

Matching Supply with Demand

A term used to describe

all the goods and materials held by an organization for sale or use

a list of items held in stock

Institute of Logistics and Transport

Definition of Inventory

Source

Inventory, Logistics and Supply Chain Management

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Slide 10.2

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

Matching Supply with Demand

Reduce the risk of supplier failure

Protect against lead-time uncertainties

Meet unexpected demands

Smooth seasonal or cyclical demand

Lot size considerations

Hedge against anticipated shortages and price

increases

Ensure rapid replenishment of items in constant

demand

Reasons for Keeping Inventory

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Slide 10.3

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

Aims of Inventory Management

Matching Supply with Demand

Provide internal and external customers with required

service levels at optimum cost

Ascertain present and future requirements for all types

of inventory to avoid overstocking

Keep stocks to a minimum by variety reduction

Provide upstream and downstream inventory visibilityin the supply chain

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Slide 10.4

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

Matching Supply with Demand

RFID advantages

Range

Durability

Selectivity

Bulk readLine of sight

Read/write

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Slide 10.5

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

The demand for the final product

The inventory policy

Whether job, batch, assembly or process production

methods are applicable

Whether demand is independent or dependent

The service level

Market conditions

Factors determining EOQ

Manufacturing/Assembly Type OrganisationsFactors that Determine the Right Quantity

Matching Supply with Demand

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Slide 10.6

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

Forecasting Issues - Questions

Matching Supply with Demand

?

1. What is the purpose of the forecast?

2. What is the time horizon?

3. What forecasting technique(s) is far most appropriate?

4. On what data must the forecasting be based and how shall it

be analyzed?

5. In what form shall the completed forecast be presented?

6. How accurate is the forecast?

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Slide 10.7

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

JIT systems

Pull SystemsPush

Systems

Matching Supply with Demand

Inventory Control Systems

Pre-determined

re-order levels

Periodic reviewsystems

Elements of

Both Push

and PullSystems

MRP and OPT

systems

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Slide 10.8

Lysons & Farrington, Purchasing and Supply Chain Management, 7thedition, Pearson Education Limited 2005

1

2

3

4

Inventory is an asset.

Inefficient inventory management will increase costs and

reduce profitability.

Inventory can enhance flexibility and provide competitive advantages.

It needs the co-operation of efficient and effective suppliers.

5The armed forces need inventory to maintain operational

readiness and performance.

Matching Supply with Demand

Why Purchasing Professionals Should Have a Grasp of

Inventory Management