Date post: | 25-May-2015 |
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Business |
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Warehouse & Inventory Management
Warehouses
• Store inventory for a period of time
Storage
protection
• Inventory may be turned over rapidly
distribution center
customer service
• Receive goods
• Identify goods
• Dispatch goods to storage
• Hold goods
• Pick goods
• Dispatch the shipment
• Operate an information system
Warehouse Activities
INVENTORY MANAGEMENT
Definitions:
Inventory-
A physical resource that a firm holds in stock with the intent of selling it
or transforming it into a more valuable state.
Inventory System-
A set of policies and controls that monitors levels of inventory and
determines what levels should be maintained, when stock should be replenished,
and how large orders should be
Functions of Inventory
1. To separate various parts of the production process
2. To decouple the firm from fluctuations in demand and
provide a stock of goods that will provide a selection for
customers
3. To take advantage of quantity discounts
4. To hedge against inflation
Types of Inventory
Raw materialPurchased but not processed
Work-in-process Undergone some change but not completed A function of cycle time for a product
Maintenance/repair/operating (MRO) Necessary to keep machinery and processes productive
Finished goods Completed product awaiting shipment
The Material Flow Cycle
Input Wait for Wait to Move Wait in queue Setup Run Outputinspection be moved time for operator time time
Cycle time
95% 5%
Inventory Management
How inventory items can be classified?
How accurate inventory records can be maintained?
• Improve customer service
• Transportation savings
• Hedge against future
• Unplanned shocks (labor strikes, natural disasters, surges in demand, etc.)
• To maintain independence of supply chain
Why hold inventory?
Dead stock
Anticipation inventory
Cycle stock Safety stock
Pipeline stock
Decoupling stock
Categories of Inventory
1. Cycle Stock :
Because of the economies of scale involved in production and
transportation it makes sense to produce and transport goods in batches. The is
called as cycle stock. 2. Safety stock :
It is a safeguard against the uncertainties of demand and supply.
3.Pipe line stock:
Since production and transportation activities take certain finite time,
firms need to carry pipeline or in transit stock. Pipeline stock consist of good
usually being worked upon (WIP) or being moved from one location to another in
the chain ( In transit Inventory).
4. Decoupling Stock:
Since it is not possible to carry out supply chain operation with just one
decision maker, the entire supply chain is usually divided into various decision making
unit, the demarcation of decision making unit take place at both organizational and
departmental boundaries, so it is not uncommon for organizational to hold large
inventories at organizational as well as departmental level. This becomes decoupling
inventories. So that flexibility at each level can be made
5. Dead Stock:
It refers to that part of the stock , that remain dormant or non moved
over a long period of time .
6. Anticipation Stock :
It consist of stock accumulated in advance of expected peak in sales or to take
care of some special event that does not occur on regular basis.
It is of two types
1. Seasonal Stock
2. Speculation Stock
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