CHAP 4 Inventory Concepts and Management (2.Type of Inventory (seasonal…
CHAP 4 Inventory Concepts and Management
1. Definition of Inventory
A physical resources that a firm holds in stock with the intent of selling it or transforming it into a more valuable store.
2.Type of Inventory
-purchased part and suppliers
-items being transported
3. Motive of holding inventory
(to facilitate smooth production and sales operations.)
(to guard against the risk of unpredictable changes in demand and supply/other forces)
(influences the decision to increase or reduce inventory level to take advantage of price fluctuations.
4. Definition of Inventory Management
-Scientific method of finding out how much stock should be maintained in order to meet the production demands and be able to provide the type of material at the right time, in the right quantity and at competitive prices
5. Objective of Inventory Management
-to maintain and optimum size of inventory for efficient and smooth production and sales operations
-to maintain a minimum investment in inventories to maximize the profitability
-effort should be made to place an order at the right time with the right source to acquire the right quantity at the right price and right quality
6. Inventory cost
Carrying cost (Cost of holding an item in inventory)
Ordering cost (Cost of replenishing inventory)
Shortage Cost (Temporary or permanent loss of sales when demand cannot met)
4.Management Cost (help to control and predict the expenditure.)
5.Human capital costs (Measure of the economic value of an employees skill set
7. Inventory Management
Practice of overseeing and controlling of the ordering, storage and use of components that a company uses in the production of the items it sells.
It also the process of controlling the finished product.
Basic in Inventory management : Inventory basic
Start with vendor supplier, distributor and until it reach it customers.
Divided to 4 part : Location, Plan , Identity and Records
Strategies to better manage inventories.
Vendor manage inventory
3 Service classes in Inventory Management