INVENTORY STRATEGY

1
INVENTORY STRATEGY

• Inventory decision high risk and impact
• The improper inventory arrangement lost of
  sales, decreased customers satisfaction, delayed
  production line, higher costs and poor quality.
• The principles significant cost center, capital
  investment, potential for obsolescence and
  damaged/total loss, no added value, the ideal
  make-to-order operation.
• The functionality geographical specialization
  (increasing operation efficiency at a single
  location, decoupling (increase operation
  efficiency at multiple locations), balancing,
  buffer uncertainties.

2
COST OF INVENTORY

• Carrying costs
• capital cost
• taxes
• insurance
• obsolescence
• Ordering costs
• Shortage Costs
• see the Inventory topic in POM class

3

• Reorder level D x T (SS)
• D average daily demand
• T average performance cycle length/lead time
• SS safety stock/buffer stock
• EOQ see the same topic in POM class

4
INVENTORY MANAGEMENT

• A planning that proactively schedules products
  movement and allocation through the channel
  according to forecasted demand and product
  availability.
• Inventory control perpetual review, periodic
  review, modified control system (TGT - upper
  limit for replenishment)
• Planning Method to coordinate inventory
  requirement across multiple locations or stages
  or channel partners in the value added chain.
• Fair Share Allocation a common sources/plant
  warehouse provides each distribution facility
  with an equitable or fair share of available
  inventory

5

• Distribution Requirement Planning the extension
  of Manufacturing/Material Requirement Planning
  (see figure 9-3).