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C H A P T E R 1 – I N T R O D U C T I O NDEFINATION AND MEANINGInventory is a list of goodsand materials, or those goods and materials themselves, heldavailable in stock by a business. Inventory are held in order to manage and hide from thecustomer the fact that manufacture/supply delay is longer than delivery delay, and also to easethe effect of imperfections in the manufacturing process that lower production efficienciesif production capacity stands idle for lack of materials.The reasons for keeping stockAll these stock reasons can apply to any owner or product stage.Buffer stockBuffer Stock is held in individual workstations against the possibility that the upstreamworkstation may be a little delayed in providing the next item for processing. Whilst someprocesses carry very large buffer stocks, Toyota moved to one (or a few items) and has now moved toeliminate this stock type.Safety stockSafety stock is held against process or machine failure in the hope/belief that the failure can berepaired before the stock runs out. This type of stock can be eliminated by programs like TotalProductive Maintenance
OverproductionOverproduction is held because the forecast and the actual sales did not match. Making to order and JITeliminates this stock type.Lot delay stockLot delay stock is held because a part of the process is designed to work on a batch basis whilstonly processing items individually. Therefore each item of the lot must wait for the whole lot tobe processed before moving to the next workstation. This can be eliminated by single pieceworking or a lot size of one.Demand fluctuation stockDemand fluctuation stock is held where production capacity is unable to flex with demand. Thereforea stock is built in times of lower utilization to be supplied to customers when demand exceedsproduction capacity. This can be eliminated by increasing the flexibility and capacity of aproduction line or reduced by moving to item level load balancing.Line balance stockLine balance stock is held because different sub-processes in a line work at different rates.Therefore stock will accumulate after a fast sub-process or before a large lot size sub-process.Line balancing will eliminate this stock type.Changeover stock
Changeover stock is held after a sub-process that has a long setup or change-over time. Thisstock is then used while that change-over is happening. This stock can be eliminated by tools likeSMED. Where these stocks contain the same or similar items it is often the work practice to holdall these stocks mixed together before or after the sub-process to which they relate. This 'reduces‘costs. Because they are mixed-up together there is no visual reminder to operators of the adjacent sub-processes or line management of the stock which is due to a particular cause and should be aparticular individual's responsibility with inevitable consequences. Some plants have centralizedstockholding across sub-processes which make the situation even more acute.