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06/08/09
Inventory Definition ,[object Object],[object Object],06/08/09
Introduction ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/08/09
Types of Inventory 06/08/09 Work in process Work in process Work in process Finished goods Raw Materials Vendors Customer
Nature of Inventories ,[object Object],[object Object],[object Object],[object Object],06/08/09
Reasons  To Hold  Inventory ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/08/09
Objective of Inventory Management ,[object Object],[object Object],[object Object],06/08/09
An effective inventory management should ,[object Object],[object Object],[object Object],[object Object],[object Object],06/08/09
An optimum inventory level involves three types of costs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/08/09
Dangers of Over investment ,[object Object],[object Object],[object Object],[object Object],06/08/09
Dangers of under-investment ,[object Object],[object Object],[object Object],[object Object],06/08/09
Functions of Inventory Management 06/08/09 ,[object Object],[object Object],[object Object]
Classification of inventory ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ABC Classification ,[object Object],[object Object],[object Object],[object Object],A B C
XYZ Classification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
HML Classification ,[object Object],[object Object],[object Object],[object Object]
VED Classification ,[object Object],[object Object],[object Object],[object Object],Therefore V items has to be stocked more  and D Items has to be less stocked
FSN Classification ,[object Object],[object Object],[object Object],[object Object],[object Object]
SDF & GOLF Classification ,[object Object],[object Object],[object Object],[object Object]
SOS Classification ,[object Object],[object Object],[object Object]
Deciding on the inventory model ,[object Object]
Different approaches ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Basic EOQ Model ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
EOQ – Three Approaches ,[object Object],[object Object],[object Object],06/08/09
EOQ & Re-order point ,[object Object],[object Object],06/08/09
Trial & Error Method ,[object Object],[object Object],[object Object],[object Object],06/08/09 Order size Q  1200 600 400 300 240 200 150 120 100 Average inventory Q/2  600 300 200 150 120 100 75 60 50 No. of orders C/Q  1 2 3 4 5 6 8 10 12 Annual carrying cost I* Q/2  600 300 200 150 120 100 75 60 50 Annual ordering cost O*C/Q  37.5 75 112.5 150 187.5 225 300 375 450 Total annual cost  637.5 375 312.5 300 307.5 325 375 435 500
Order- Formula approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],06/08/09
Q 0 T1 T2 T3 T4 Average inventory = Q/2 Time Inventory  level order quantity Certainty case of the inventory cycle ,[object Object],[object Object],[object Object]
Graphical method to find EOQ Cost  in  RS. Order quantity 0 Ordering cost = DS/Q Carrying cost = CQ/2 Total cost  EOQ
Extension of basic EOQ model ,[object Object],[object Object],Non zero lead time
Extension of basic EOQ model ,[object Object],[object Object],T1 - n T2 - n T3 - n T4 - n T1  T2  T3  T4  Time Q 0 Reorder point Placement of a order
Probabilistic inventory model ,[object Object],[object Object],[object Object]
[object Object],Probabilistic inventory model  contd… Reorder point Safety stock Placement of  order Lead time T1 T2 T3 T4 T5 T6 Stock out
A Review ,[object Object],[object Object],[object Object],[object Object],[object Object]
Special inventory model ,[object Object],[object Object],[object Object]
Non – Instantaneous replenishment Special inventory model A B C D A B C Thus the inventory is replenished gradually than in lots Particularly in situation were manufacturers use continues  production process e.g. FACT makes Ammonium on a continual basis Capacity 10 units
Discount Quantities ,[object Object],Special inventory model Hence a new approach is needed to find the best lot size Total cost Annual holding cost Annual ordering cost Annual cost of materials = + +
One period decisions ,[object Object],Special inventory model Applicable to fashion goods, seasonal goods and  due to change in technology The  newsboy  problem
Inventory management under uncertainty ,[object Object],[object Object],[object Object]
Option price model ,[object Object],[object Object]
Risk adjusted discount cash flow (DFC) Model ,[object Object],[object Object],[object Object],Beneficial for projects like oil drilling were the  benefit is acquired only after a long time  but  once oil is struck the additional expanse is covered.
Dynamic inventory model ,[object Object],[object Object],[object Object]
Emerging trends in inventory management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Inventory control responsibility ,[object Object],[object Object],[object Object],[object Object],[object Object],In effect the responsibility cannot be kept  on one head since inventory management  is a integrated effort
THANK YOU

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Inventory Management

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  • 4. Types of Inventory 06/08/09 Work in process Work in process Work in process Finished goods Raw Materials Vendors Customer
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  • 29. Graphical method to find EOQ Cost in RS. Order quantity 0 Ordering cost = DS/Q Carrying cost = CQ/2 Total cost EOQ
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  • 36. Non – Instantaneous replenishment Special inventory model A B C D A B C Thus the inventory is replenished gradually than in lots Particularly in situation were manufacturers use continues production process e.g. FACT makes Ammonium on a continual basis Capacity 10 units
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