Management of Stock/ Inventory

Group Members Tushar Kaushik 107 Vikram Singh 110 Veeraj Chavan 112 Yogesh Waghela 116 Yugandhar Pradhan 117

Introduction
Inventory Inventory is detailed, itemized list, report, or record of things in one's possession, especially a periodic survey of all goods and materials in stock

Inventory Management Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials

Types of Inventory/Stock
Buffer/safety stock Cycle stock De-coupling Anticipation stock Pipeline stock

Reasons for keeping Inventory

Time Uncertainty Economies of scale

Inventory proportionality
The use of inventory proportionality is thought to have been inspired

by Japanese just-in-time parts inventory management made famous by Toyota Motors in the 1980s

Inventory proportionality is the goal of demand-driven inventory management

Purpose
The primary optimal outcome is to have the same number

of days' (or hours', etc.) worth of inventory on hand across all products so that the time of run out of all products would be simultaneous
The

secondary goal of inventory proportionality is inventory minimization

Application
The

technique of inventory proportionality is most appropriate for inventories that remain unseen by the consumer

It is opposite to "keep full" systems and differentiated from

the "trigger point" systems

Inventory proportionality is used effectively by just-in-time

manufacturing processes and retail applications where the product is hidden from view

High Level Inventory Management

High-level financial inventory has two basic formulae, which relate to the accounting period:
Cost of Beginning Inventory at the start of the period +

inventory purchases within the period + cost of production within the period = cost of goods available
Cost of goods available cost of ending inventory at the end of

the period = cost of goods sold

The benefit of these formulae is that the first absorbs all

overheads of production and raw material costs into a value of inventory for reporting. The second formula then creates the new start point for the next period and gives a figure to be subtracted from the sales price to determine some form of sales-margin figure.

Accounting for Inventory

Financial accounting Role of inventory accounting FIFO vs. LIFO accounting Standard cost accounting

Theory of constraints cost accounting

Inventory and Supply Chain Management

Bullwhip effect

demand information is distorted as it moves away from the end-use customer higher safety stock inventories to are stored to compensate

Seasonal or cyclical demand Inventory provides independence from vendors

Take advantage of price discounts

Inventory provides independence between stages and avoids work stop-pages

Inventory and Quality Management

Customers usually perceive quality service as

availability of goods they want when they want them

Inventory must be sufficient to provide high-quality

customer service in TQM

Special Terms
Stock Keeping Unit (SKU) is a unique combination of all the

components that are assembled into the purchasable item. Therefore, any change in the packaging or product is a new SKU. This level of detailed specification assists in managing inventory.
Stock out means running out of the inventory of an SKU. "New old stock" (sometimes abbreviated NOS) is a term used in

business to refer to merchandise being offered for sale that was manufactured long ago but that has never been used. Such merchandise may not be produced anymore, and the new old stock may represent the only market source of a particular item at the present time.