INVENTORY MANAGEMENT

WHAT IS INVENTORY?

Stock of goods kept to meet future demand Purpose of inventory management how many units to order when to order

TYPES OF INVENTORY
materials purchased items or extracted materials transformed into components or products Components parts or subassemblies used in final product Work-in-process items in process throughout the plant Finished goods products sold to customers Distribution inventory finished goods in the distribution system
Raw

Types of Inventory

Inventory Management

An efficient system of inventory management is will determined. What to purchase How much to purchase From where to purchase Where to store

Inventory Management

Inventory Holding Costs

Reducing Inventory JIT Inventory Demand Uncertainty Real Inventory Reduction

Pseudo Inventory Reduction

Inventory Management in Marketing Channels

Objectives Of Inventory Management

To ensure continuous supply of raw material, spares and finished goods.

To avoid both overstocking and under stocking of

inventory.

To maintain investments in inventories at optimum

level.

Cont.

To eliminate duplications in orders To keep material cost under control. To minimize losses through wastage and damages .

Inventory Management Across the Organization

Inventory management policies affect functional areas throughout

Accounting is concerned of the cost implications of inventory Marketing is concerned as stocking decision affect the level of customer service Information Systems is involved to tack and control inventory records

USES OF INVENTORY

Anticipation or seasonal inventory Fluctuation Inventory or Safety stock: buffer demand fluctuations Lot-size or cycle stock: take advantage of quantity discounts or purchasing efficiencies Transportation or Pipeline inventory Speculative or hedge inventory protects against some future event, e.g. labor strike Maintenance, repair, and operating (MRO) inventories

INVENTORY MANAGEMENT IN RETAIL

CARRY RIGHT INVENTORY.

CARRY RIGHT AMOUNTS OF INVENTORY.

MANAGE CASH FLOW.

EARN A PROFIT.

WHY IS IT DIFFICULT?

HUMONGOUS ASSORTMENT OF GOODS. CONSUMER PERFERENCE IS LARGELY WHIMSICAL.

DIFFICULT TO STOCK AND KEEP TRACK.

PROBLEM IDENTIFICATION

RATIO OF SALES TO INVENTORY SUPPLY CALCULATION TURNOVER

THANK YOU