Coyle Chapter 9 PowerPoint Slides

Coyle Chapter 9 PowerPoint Slides - Chapter 9 Managing...

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Chapter 9 Managing Inventory in the Supply Chain Learning Objectives After reading this chapter, you should be able to do the following: Appreciate the role and importance of inventory in the economy. List the major reasons for carrying inventory. Discuss the major types of inventory, their costs, and their relationships to inventory decisions. Understand the fundamental differences among approaches to managing inventory. Describe the rationale and logic behind the economic order quantity (EOQ) approach to inventory decision making, and be able to solve some problems of a simple nature .
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Learning Objectives (cont.) After reading this chapter, you should be able to do the following: Understand alternative approaches to managing inventory—just- in-time (JIT), materials requirement planning (MRP), distribution requirements planning (DRP), and vendor-managed inventory (VMI). Explain how inventory items can be classified. Know how inventory will vary as the number of stocking points changes. Make needed adjustments to the basic EOQ approach to respond to several special types of applications.
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Introduction Inventory is an asset on the balance sheet and a variable expense on the income statement. Inventories also have an impact on return on investment (ROI) for the firm. Inventories also have an impact on return on investment (ROI) for an organization.
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GDP versus Inventory Nominal GDP grew by 127.2 percent between 1990 and 2006. The value of inventory increased by 78.4 percent during the same time period. Inventory costs as a percent of GDP declined from 17.9 percent in 1990 to 14.1 percent in 2006. The absolute value of inventory increased during this time period, but it decreased as a percentage of GDP.
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Batching economies or cycle stocks arises from three sources procurement production transportation Scale economies are often associated with all three, which can result in the accumulation of inventory that will not be used or sold immediately
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Uncertainty/Safety Stocks All organizations are faced with uncertainty. On the demand side, there is usually uncertainty in how much customers will buy and when they will buy it. On the supply side, there might be uncertainty about obtaining what is needed from suppliers and how long it will take for the fulfillment of the order.
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Time/In-Transit and Work-in-Process Stocks The time associated with transportation means that even while goods are in motion, an inventory cost is associated with the time period. The longer the time, the higher the cost. WIP inventories, associated with manufacturing, can be significant while the length of time the inventory sits in a manufacturing facility waiting and should be carefully evaluated in relationship to scheduling techniques and the actual manufacturing/assembly technology.
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Seasonal Stocks Seasonality can occur in the supply of raw materials, in the demand for finished product, or in both. Those faced with seasonality issues are constantly challenged
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This note was uploaded on 07/28/2011 for the course MRKT 4354 taught by Professor Nancyevans during the Summer '11 term at Virginia Tech.

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Coyle Chapter 9 PowerPoint Slides - Chapter 9 Managing...

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