PRESENTATION ON INVENTORY MANAGEMENT

WHAT IS INVENTORY MANAGEMENT

Inventory management is concerned with keeping enough product/raw material on hand to avoid running out while at the same time maintaining a small enough inventory balance to allow for a reasonable return on investment.

TYPES OF INVENTORY
RAW MATERIAL WORK-IN PROGRESS FINISHED GOODS CASH & MARKETABLE SECURITIES

WHY INVENTORY NEEDED?

TRASACTION MOTIVES
PRECAUTIONARY MOTIVES
SPECULATIVE MOTIVES CONTRACTUAL MOTIVES

COST OF HOLDING INVENTORY

ORDERING COST
CARRYING COST
STOCKOUT COST

CHARACTERISTICS OF INVENTORY SITUATIONS

LEAD TIMES
SOURES & LEVEL OF RISK
PEPLENISHMENT RATE

INVENTORY CONTROLLING METHOS

ABC APPROACH HML CLASSIFICATION XYZ CLASSIFICATION VED CLASSIFICATION FSN CLASSIFICATION