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Week 1 - Lecture Material MOIS
Week 1 - Lecture Material MOIS
Week 1 - Lecture Material MOIS
1
Sub Topics
1. Importance of Inventory/Materials Management System, Inventory and
its Definitions, Types of Inventory
2. Why Inventory, Classification of Inventory Problems
3. Classes of Inventory Problems, Inventory Costs
4. Types of Inventory and Product Positioning Strategies, Inventory
Management and Financial Performance
5. Concept of Inventory Flow Cycle, Objectives and Decisions of Inventory
Control
• Almost all organizations use, transform, distribute, or sell materials of one kind
or another.
Sale
F/G
MRO
Idle Use
R/M
Transform
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PROF PRADIP KUMAR RAY
DEPARTMENT OF INDUSTRIAL AND SYSTEMS ENGINEERING
IIT KHARAGPUR 11
Types of Inventoryyou consolidate the requirement of an item
for an extended time period and accordingly,
you determine the inventory.
• Hence, there are two parameters, related to above questions, for any
inventory control system.
• A number of factors may affect this inventory problem.
• Each of these factors may have different levels.
• Combinations of the types and levels of these factors determine classes of
inventory problems.
• Over and above these factors as stated, the demand distribution over
time may be assumed to be fixed (stationary) or variable (non-stationary).
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Type of Demand
problem
(Supply) Certainty Risk Uncertainty
Static ✔ * ✔ ✔
Dynamic ✔ ✔ ✔
• However, static inventory problem under certainty does not come under
inventory problem as two decisions (when to order and how much to order)
can be made without even formulating the problem. The decisions are
already known. Only when a number of items are considered under this
class, the problem may be referred to as a typical scheduling problem.
• While formulating any class of problem, we need to know the working of the
inventory control system, its parameters, the constraints, if any, and
assumptions for modelling.
• Usually the values of these parameters are determined such that the cost of
the inventory control system under consideration is held at a minimum level.
• Other types of costs as stated are considered a variable cost as these costs
are dependent on inventory control system or policy.
B In a repetitive manufacturing
bl
em
system, (batch production),
s
As
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bl Storag
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s
ba y
s the cost profile consists of
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Fa n cost (AB), Overhead cost (BC),
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A and Total Product cost (OC)
R/M F/G
O
Manufacturing Cycle
time
Throughput time
Material Product
Acquisition Shipment
Purchasing
WIP
Production
control
F/G
Marketing
Demand
57