Chapter12 - MSB 354 12 Inventory Management 12-1 Operation...

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MSB 354 12 Inventory Management 12-1
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Operation and Control Quality Control Supply Chain Management Inventory Management Aggregate Planning MRP and ERP JIT and Lean Operations Scheduling Project Management 12-2
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12-3 Learning Objectives Define the term inventory, list the major reasons for holding inventories, and list the main. requirements for effective inventory management. Discuss the nature and importance of service inventories Discuss periodic and perpetual review systems. Discuss the objectives of inventory management. Describe the A-B-C approach and explain how it is useful.
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12-4 Learning Objectives (con.) Describe the basic Economic Order Quantity(EOQ) model and its assumptions and solve typical problems. Describe the Economic Production Quantity(EPQ) model and solve typical problems. Describe the Quantity Discount model and solve typical problems. Describe Reorder Point models and solve typical problems. Describe situations in which the single-period model would be appropriate, and solve typical problems.
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Inventory Management A core activity in operations management . A key for the successful operation of most business and their supplier chains. Operations, marketing, and finance have interest. since p oor inventory management hampers operations, diminishes customer satisfaction, increase inventory cost Major Topics - Functions of inventories, Objectives of inventory control - Requirements for effective inventory management - Techniques for determining how much to order and when to order 12-5
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12-6 Independent Demand A B(4) C(2) D(2) E(1) D(3) F(2) Dependent Demand Independent demand is uncertain . Dependent demand is certain. a stock or store of goods Inventory
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12-7 Inventory Models Independent demand item : finished goods, items that are ready to be sold or used (this chapter) E.g. a computer Dependent demand item : components of finished products (chapter 14) E.g. component parts that make up the computer
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Nature of Inventory A vital part of business ( F ) , necessary for operation (o) and directly related to customer satisfaction (M) . - GM: $40 billion worth of materials, spare parts, cars and trucks are in its supply chain. - Typical firms carry about 30% of its current assets and as much as 90% of its working capital invested in inventory . A reduction of inventories can result in a significant increase in Return on Investment (ROI)*. * ROI = profit after tax/ total assets, significant portion of total assets Inventory decision in service organizations is also critical: drugs & blood supplies (limited shelf life) in the emergency room 12-8
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12-9 Types of Inventories Raw materials and purchased parts Partially completed goods called work-in-process(WIP) Replacement parts, tools, and supplies Finished-goods inventories ( manufacturing firms ) or merchandise ( retail stores ) Goods-in-transit to warehouses or customers (Pipeline inventory)
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12-10 Functions of Inventory To meet anticipated demand : anticipation stocks are held to
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This note was uploaded on 12/06/2011 for the course MSB 354 taught by Professor Nam during the Fall '11 term at Korea Advanced Institute of Science and Technology.

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Chapter12 - MSB 354 12 Inventory Management 12-1 Operation...

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