MAN 3504 - Independent Demand Inventory Management - Part 1 (6 slides per page)

MAN 3504 - Independent Demand Inventory Management - Part 1 (6 slides per page)

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
MAN 3504 -- Indep. Demand Inventory Mgt (Part 1) 1 Independent Demand Inventory Management AN 3504: Independent Demand Inventory Management – Part 1 (Part 1) Inventory ± Material stored for future consumption ± Single largest asset for most manufacturers (10- 20% of total assets), as well as wholesalers and retailers (20-50% of total assets)* 2 ± U.S. inventory holding costs in 2009: $357 Billion (2.5% of GDP)** ± Inventory holding costs are one of the highest logistics costs; logistics represented about 7.7% of GDP in 2009 ($1.1 trillion)**, or about 8.8x advertising, 1.7x national defense, and 0.44x health care * Stock, James R. & Douglas M. Lambert: Strategic Logistics Management (4 th edition) ** 21 st Annual State of Logistics Report , Council of Supply Chain Management Professionals Inventory Types ± Finished Goods ± Raw Materials ± Work-in-Process (WIP) ± Semi-Finished Assemblies (or Sub-Assemblies) 3 Semi Finished Assemblies (or Sub Assemblies) ± Maintenance, Repair, & Operating Supplies (MRO) Finished Goods Inventory in Field Raw Materials Inventory WIP; Sub- Assemblies Inventory at Plant Finished Goods Inventory positions for a manufacturer: Why is Inventory Carried? ± Economies of scale: Al ows producing & buying more than you need right now • Avoids cost of processing an order for every item demanded ( cycle stock ) • Al ows us to take quantity discounts when purchasing ( anticipation or speculative stock ) • Al ows producing in bulk to minimize expensive setups in mfg. ± Balances supply and demand: • Al ows buildup of stock in anticipation of seasonal demand and/or to stabilize employment levels over time ( anticipation or seasonal stock) 4 • Al ows flexibility in production & distribution rates ( decoupling stock ) • Buffer between al the links in the supply chain: supplier-mfr-retailer-consumer
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

MAN 3504 - Independent Demand Inventory Management - Part 1 (6 slides per page)

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online