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Inventory Management - Coggle Diagram
Inventory Management
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Functions of Inventories
Anticipation Inventory
ex: peak selling season, a promotion program, vacation shutdown or a strike threaten
Safety stock
Fluctuation inventory, buffer stock, reserve stock
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Transportation inventory
also called: pipeline, movement inventories
I = tA/365
(I: average annual inventory in transit
t: transit time in days
A: annual demand)
I ~ not depend on the shipment size
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Objectives of Inventory
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Operating Efficiency
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Help build production planning (ex: level production and build anticipate inventory for sale in peak periods).
- Lower OT costs
- Lower hiring and firing costs
- Lower training costs
- Lower subcontracting costs
- Lower capacity required
Run longer production runs:
- Lower setup cost
- Increase production capacity thanks to more time to produce product (due to the decrease in setup time)
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Flow of Materials
- Raw materials
- Work-in-process (WIP)
- Finished goods
- Distribution inventories
- Maintenance, repair, and operational supplies (MROs)
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