2. Topics of the session
• Inventory & Inventory Management
• Purpose of Inventory Management
• Objectives of Inventory Management
• Types of Inventory
• Inventory & supply chain management
• Forms of demand
• Inventory control system
• Inventory Tracking
3. Learning Outcomes
By the end of this session you will be able to;
• Define inventory & inventory management
• Understand the types of inventory
• Understand the tools & techniques of inventory management
• Understand the purpose of inventory management
4. What Is Inventory?
• Stock of items kept to meet future demand
Inventory management refers to the process of ordering,
storing, using, and selling a company's inventory. This includes
the management of raw materials, components, and finished
products, as well as warehousing and processing of such items.
6. Inventory Management- objectives
• minimize investments in inventory
• meet the demand for products by efficiently organizing the
production & sales operations
7. Types of Inventory
• Raw materials
• Purchased parts and supplies
• Work-in-process (partially completed) products (WIP)
• Items being transported
• Tools and equipment
8. Inventory and Supply Chain
Management
1. Bullwhip effect
• demand information is distorted as it moves away from the end-
use customer
• higher safety stock inventories to are stored to compensate
2. Seasonal or cyclical demand
3. Inventory provides independence from vendors
4. Take advantage of price discounts
5. Inventory provides independence between stages and
avoids work stop-pages
9. Forms of Demand
• Dependent - Demand for items used to produce final products.
• Independent - Demand for items used by external customers
10. COSTS OF HOLDING
INVENTORIES
• Ordering costs
• Inventory Carrying costs
• Opportunity costs of funds blocked
• Shortage
12. Inventory Control Systems
• Continuous system (fixed-order-quantity)- constant
amount ordered when inventory declines to predetermined level
• Periodic system (fixed-time-period)- order placed for
variable amount after fixed passage of time
13. What is Inventory Tracking?
• Inventory tracking refers to the process of a business
continuously monitoring all of the inventory that it owns.
• Inventory has several definitions, but it most commonly means
raw materials, unfinished goods, and ready-to-sell items.
14. What is being tracked?
• Updated stock levels
• Stock locations
• Inventory accuracy
• Carrying costs
• Inventory valuation
• Inventory turnover
• Reorder levels
15. Why do you need inventory
tracking?
• Better stock visibility
• Avoiding shortages
• Better inventory forecasting
• Multiple location tracking
• Faster error detection
16. Summary
• Inventory management is the entire process of managing
inventories from raw materials to finished products.
• Inventory management tries to efficiently streamline
inventories to avoid both gluts and shortages.
• Inventory tracking system is important for easy & timely access
of data so that the inventory can be managed without any
hurdle.
17. Self- Assessment Questions
Q1. Choose the correct option- Demand for items used to
produce final products is
• Dependent Demand or
• Independent Demand
18. Self- Assessment Questions
Q2. which of the following comes under costs of holding
inventories
• Price decline
• Carry cost
• Product Deterioration
• Product Obsolescence
