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Inventory Planning and Control PPT
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Inventory Planning and Control



.ppt  Inventory Planning.ppt (Size: 424.5 KB / Downloads: 32)

Inventory Planning Independent demand items

Finished goods and spare parts typically belong to independent demand items in manufacturing organisations
Two attributes characterise and distinguish independent demand items:
Timing of demand: Independent demand items have a continuous demand
Uncertainty of demand: There is considerable element of uncertainty in the demand in the case of independent demand items
Inventory planning of independent demand items must address the following two key questions:
How much?
When?

Types of Inventory

Seasonal Inventory: Seasonality in demand is absorbed using inventory
Decoupling Inventory: Complexity of production control is reduced by splitting manufacturing into stages and maintaining inventory between these stages
Cyclic Inventory: Periodic replenishment causes cyclic inventory
Pipeline Inventory: Exists due to lead time
Safety Stock: Used to absorb fluctuations in demand due to uncertainty

Costs in Inventory Planning Ordering Cost

Search and identification of appropriate sources of supply
Price negotiation, contracting and purchase order generation
Follow-up and receipt of material
Eventual stocking in the stores after necessary accounting and verification
A larger order quantity will require less number of orders to meet a known demand and vice versa
 

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