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Inventory Management Assignment PDF

Added on - 22 Jan 2022

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12-1© 2011 Pearson Education, Inc. publishing as Prentice Hall
12
Inventory
Management

PowerPoint presentation to accompany

Heizer and Render

Operations Management, 8e
12-2© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline

The Importance of Inventory
Functions of Inventory
Types of Inventory
Managing Inventory
ABC Analysis
Record Accuracy
Cycle Counting
Control of Service Inventories
Inventory Models
Independent vs. Dependent Demand
Holding, Ordering, and Setup Costs
12-3© 2011 Pearson Education, Inc. publishing as Prentice Hall
Outline
Continued
Inventory Models for Independent Demand
The Basic Economic Order Quantity (EOQ) Model
Minimizing Costs
Reorder Points
Production Order Quantity Model
Quantity Discount Models
Probabilistic Models and Safety Stock
Other Probabilistic Models
Single-Period Model
Fixed-Period (P) Systems
12-4© 2011 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives

When you complete this chapter you should be able

to:

1.
Conduct an ABC analysis
2.
Explain and use cycle counting
3.
Explain and use the EOQ model for independent
inventory demand

4.
Compute a reorder point and safety stock
5.
Apply the production order quantity model
6.
Explain and use the quantity discount model
7.
Understand service levels and probabilistic
inventory models
12-5© 2011 Pearson Education, Inc. publishing as Prentice Hall
Inventory Management

The objective of inventory management is to

strike a balance between inventory

investment and customer service
12-6© 2011 Pearson Education, Inc. publishing as Prentice Hall
Importance of Inventory

One of the most expensive assets of many
companies representing as much as 50% of

total invested capital

Operations managers must balance inventory
investment and customer service
12-7© 2011 Pearson Education, Inc. publishing as Prentice Hall
Functions of Inventory

1.
To decouple or 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
12-8© 2011 Pearson Education, Inc. publishing as Prentice Hall
Types of Inventory

Raw material
Purchased 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
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