Inventory
Stocks of goods and materials that are maintained for many purposes, the most common being to satisfy normal demand patterns
Inventory Managemnt
A key component in logistics and SCM objevtives
Inventory Classifications: Cycle or Base Stock
Refers to inventory that is needed to satisfy normal demand during the course of an order cycle.
Inventory Classifications: Safety or Buffer Stock
Refers to inventory that is held in addition to cycle stock to guard against uncertainty in demand or lead time
Inventory classifications pipeline or in-transit stock
Is inventory that is in route between various fixed facilities in the logistics system such as a plant warehouse or store
Inventory classifications speculative stock
Refers to inventory that is held for several reasons including seasonal demand projected price increases and potential shortages of a product
Psychic stock
This type of inventory is associated with retail stores and the general idea is that customer purchases are stimulated by inventory that they can see this explains why some retailers stock huge amounts of merchandise
Inventory carrying or holding costs
The costs associated with holding inventory. Usually shown in a percentage
Inventory shrinkage
Is another component of inventory carrying cost and refers to the fact that more items are recorded entering and leaving warehouse facilities. Caused by damage loss or theft
Ordering cost
Refer to those costs associated with ordering inventory, such as order cost and setup costs
Stock out costs
Involves an understanding of a customer's reaction to a company being out of stock when the customer wants to buy an item
Fixed order quantity system
a fixed amount of inventory
Fixed order interval system
Orders that are placed at fixed time intervals
Reorder trigger point (ROP)
The level of inventory at which a replenishment order is placed
ROP = DD ? RC
Reorder point = Daily Demand ? Replenishment Cycle
Economic order quantity (EOQ)
Deals with calculating the proper order size with respect to to cost the cost of carrying the inventory and the cost of ordering the inventory
ABC analysis of inventory
It recognizes the inventories are not of equal value to a firm and not as a result all inventory should not be managed in the same way. 80/20 rule. That 80% of a company's sales come from 20% of its products.
Dead inventory or dead stock
Refers to product for which there is no sales during a 12 month period. It increases inventory carrying cost and takes up space in a warehousing facility
Inventory turnover
Refers to the number of times that inventory is sold in a 1 year. Calculated by dividing the cost of good sold by average inventory
Complementary products
Inventories that can be used or distributed together such as razor blades and razors
Substitute products
Products that can feel the same need or want as another product. Think name brand soda vs generic brands
Lean manufacturing
Focuses on the element pation of waste and the increase of speed and flow identifies seven major sources of waste one of which is inventory
JIT approach
Seeks to minimize inventory by reducing its not eliminating SS as well as by having the required amount of materials arrived at the production location at the exact time they're needed
Service parts logistics
Involves designing a network of facilities to stock service parts deciding upon inventory ordering policies, stocking the required parts, and transporting parts from stocking facilities to customers
Vendor - managed Inventory (VMI)
The size and timing of replenishment orders are the responsibility of the manufacturer. VNI allow manufacturers to have access to a distributors or retailers sales and inventory data accomplished electronically Electronic Data Interchange *EDI)