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Inventory Management (Five Costs (Human capital (The cost of labor to…
Inventory Management
Five Costs
Human capital
The cost of labor to manage stock for example moving it, handling it and counting it finance.
Finance costs
For example, when capital is invested in inventory, the cost of finance is interest or the last opportunity investing capital elsewhere.
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Facility cost
Holding costs with include rental mobile, static equipment, utilities and compliance costs. For example for dangerous goods or pharmaceutical products
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Three Service Classes
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Non-critical
These products needed within a reasonable time frame but are not necessarily urgent such as computers, household, white goods and building material.
Scheduled delivery
These are goods with can be built or customized for particular customers and delivery according to agree delivery times. This applies to some technology products also furniture.
Strategies
Postponement logistics
This is common to many international manufactures and it's the process of the postponing final assembly of goods until demanded in the offshore market where they will be sold. This enables efficient storage of a small range of goods while offering a fast response time to the designed market
Vendor managed inventory
Some companies involved in manufacturing integration or assembly rely on the vendors to manage their own stock until the goods are actually used on the production line. The manufacturers also doesn't have to carry any stock and only pays the stock when used. This strategy can save the manufacturer money but consequently load certain costs upon vendors.
Define
Inventory management is the practice overseeing and controlling of the ordering, storage and use of components that a company uses in the production of the items it sells. Inventory management is also the practice of overseeing and controlling of quantities of finished products for sale.