OMGT2085_Topic05_Inventory Management_VietnamContextualized2012

OMGT2085_Topic05_Inventory Management_VietnamContextualized2012

Info icon This preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
OMGT2085 Introduction to Logistics & SCM Topic 5 Inventory Management VpLyonII_0182 (2008), Available: flickr, / [accessed 1 October 2012]. Photo by Julien Haler.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Agenda Inventory Inventory in the Economy – a Snapshot Reasons for Holding Inventory Inventory Costs Classifying Inventory Inventory Visibility Fundamentals Approaches to Managing Inventory Economic Order Quantity (EOQ) Other Approaches to Managing Inventory Intro to Logistics & Supply Chain Management 2
Image of page 2
The primary functions of inventory are to: Buffer from uncertainty in the marketplace & decouple dependencies in the supply chain (e.g., safety stock) Four broad categories of inventories Raw materials - unprocessed purchase inputs Work-in-process (WIP)- partially processed materials not yet ready for sale Finished goods - products ready for shipment Maintenance, repair & operating (MRO)- materials used in production (e.g., cleaners & brooms) Management must reduce inventory levels yet avoid stockouts and other problems Maximize return of the investment Intro to Logistics & Supply Chain Management 3 Inventory
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Importance of inventory in other functional areas marketing more inventory for higher customer service manufacturing more inventory to schedule longer production runs finance less inventory to keep inventory turnover ratios high (reduce risk of inventory loss) and to keep Return On Assets (ROA) high (increase competitiveness) Intro to Logistics & Supply Chain Management 4 Inventory
Image of page 4
Inventory in the Economy – a Snapshot Intro to Logistics & Supply Chain Management 5
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Inventory Carrying Cost in the US USD283 billion in 1980 USD446 billion in 2006 Inventory Carrying Cost as a % of GDP of the US has decreased 4.9% of GDP in 1990 3.4% of GDP in 2006 See supplementary Presentation OMGT2085- ILSCM_CSCMP_18thAnnualStateOfLogisticsReport2007_Pre sentation Source: Inventory in the Economy – a Snapshot Intro to Logistics & Supply Chain Management 6
Image of page 6
Inventory in the Economy – a Snapshot Intro to Logistics & Supply Chain Management 7
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Inventory Carrying Cost accounted for 45% of Total Logistics Costs for firms in 1984 34% of Total Logistics Costs for firms in 2006 See supplementary Presentation OMGT2085- ILSCM_CSCMP_18thAnnualStateOfLogisticsReport2007_Pre sentation Source: Inventory in the Economy – a Snapshot Intro to Logistics & Supply Chain Management 8
Image of page 8
Reasons for Holding Inventory Batching Economies / Cycle Stocks: Procurement Economics trade-off: large (bulk) purchases qualifying for quantity discounts v. inventory costs when savings from bulk purchase > inventory costs, e.g. raw materials more inventory Batching Economies / Cycle Stocks: Production Economics trade-off: shutdown production v. inventory costs long production runs & smoothing cycle stock (more inventory) cycle stock is beneficial, on the condition that analysis is done to justify the cost of additional inventory Intro to Logistics & Supply Chain Management 9
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern