1er Parcial Flashcards
¿What is inventory?
Is a stock of items kept by an organization to meet internal or external demand
What is operations management
Activities that relate to the creation of goods and services through the transformation of inputs to outputs.
What is inventory management
Inventory management is the activity which organizes the availability of items to the customers.
What is the role of inventory?
The role of inventory is to meet the required demand at a minimum cost, optimizing three targets: customer service, inventory costs, operating costs.
Motivation for holding inventories
Economies of scale: The more you produce, the more you reduce the price per product.
Uncertainties: The uncertainty of external demand
Speculation: When the value of a item is expected to increase.
Transportations: when transportation times are long, the investment in pipeline inventories can be substantial.
Smoothing: producing and storing inventory in anticipation
of a peak demand.
Logistics: constraints can arise in the purchasing,
production, or distribution of items that force the
system to maintain inventory.
Control costs: cost of maintaining and inventory
control system
Types of inventories:
Raw Materials
WIP
MRO: Inventories devoted to maintenance/repair/ operating.
FG Inventories
What are the fundamental decisions in inventory management
When to order
How much to order
Nature of the demand
Independent vs dependent
Deterministic vs stochastic
What is Leadtime
is the amount of time that elapses from
the instant an order is placed until it arrives
What is perishability
Something that canot be storage for a long time because it gets bad
Conitinous vs periodic
A constant amount is ordered when
inventory declines to a predetermined level
An order is placed for a variable amount
after a fixed amount of tim
Inventory Turnover Ratio
(how quickly goods are moving)
```
ITR = (Average Demand)/
Average Inventory
=
(Cost of Goods Sold)/
(Average Inventory Value)
~~~
Why does ITR matter?
It tells how quicky your company is selling inventory
It can be used as an accurate comparison to
industry averages.
Measure your company’s sales volumes
DIO
(average number of days a company holds inventory before
selling it)
DIO = (Inventory Level for a Period)
(Total Revenue) ⇥ Days (in Period)
Key Issues Faced by Operations Managers
Priorities for managing SKU
Ensuring the inventory- related data are accurate and reliable
Integrating technology to support inventory
ABC Analysis
Classifying inventory according to its dollar value
Application of Pareto principal
Few critical inventory parts and not the many trivial ones
Categories of ABC Analysis
“A” items 15% items 70 to 80% of the total dollar value
“B” 30% of inventory and 15 to 25% of the total value
C items 50% of the inventory and 5% to 15% of the total value
Characteristics of A products
Represent a substantial inventory investment
Limited availability
Close control to reduce uncertainties
Continous monitoring of inventory
Characteristics of ´B´ Products
In many cases these are ordered very infrequently
• Consist mainly of service parts
• Could be reviewed periodically
• Less sophisticated forecasting methods could be
used
Characteristics of “C” products
Very inexpensive items with moderate levels of demand
Large lot are recommended to minimze the frequency that these items are ordered
• Can be controlled using automated computer system
Situations which typically arrive abc analysis
✦ Too many A class items ✦ Large number of products (D class) ✦ Non-moving items (O class) ✦ Fixed stock level items (F class) ✦ Non-Stock items
Good inventory policies are
meaningless if management does not
know what inventory is on hand.
Supply chain functions.
Physical mediation
Reduce costs of production, transportation, storage
More for functional products than innovative
Market mediation
Supply exceeds demand, be prepared for fluctuations in demand
Speed flexibility, better for innovative products
Efficient process vs responsive process
The efficiente process is the process which take cares about reducing costs and produce more with less always improving knowing your demand
And the responsive process is the process that have the ability to change waiting for the demand because is more dificult to forecast the demand.
But
