Chapter 5 - Managing Inventory Flows in the Supply Chain...

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1 1 Managing Inventory Flows in the Supply Chain Chapter 5 2 Chapter 5 Learning Objectives Understand the importance of coordinated flows of inventory through supply chains. Appreciate the role and importance of inventory in the economy. Understand the major reasons for carrying inventory. Discuss the major types of inventory-related costs and their relationships to inventory decisions. Understand how inventory items (stock-keeping units) can be classified. Understand how companies can evaluate the effectiveness of their inventory management techniques.
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2 3 What Is Inventory? Inventory : a supply of resources (or materials, goods, commodities) that are held for the purpose of future utilization What function does inventory serve? What are some negative effects of inventory? Basic Questions How much to order? When to order? What is the total cost? 4 Inventory Management Inventory management primarily involves establishing the amount of inventory to keep in stock. The most important aspect of this process involves balancing the trade-offs between the costs of carrying inventory and the benefits of carrying inventory. Essentially, this addresses the previous questions of how much to order and when to order.
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3 5 Basic Forms of Inventory Several different forms of inventory occur. – raw materials and components – work-in-process (WIP) – finished goods 6 Types of Inventory Inventory can be classified by how it is created. cycle stock safety stock – anticipatory – pipeline Each type comes into being in a different way.
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4 7 Cycle Stock Inventory Cycle stock inventory represents the accumulated supply of goods which have been obtained for future use or sale to satisfy demand. Reasons for carrying
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This note was uploaded on 04/11/2011 for the course WCOB 2023 taught by Professor Billthompson during the Spring '07 term at Arkansas.

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Chapter 5 - Managing Inventory Flows in the Supply Chain...

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