3. “Storage or warehousing provides the place utility as
part of logistics for any business and along with
Transportation is a critical component of customer
4. Reasons for warehousing:-
To support the company’s customer policy.
To maintain a source of supply without interruptions.
To achieve transportation economies.
To support changing market conditions and sudden changes in demand.
To support any JIT programs.
To provide customers with the right mix of products at all times and all
To ensure least logistics cost for a desired level of customer service.
9. The Warehouse location
1) Market positioned:
a) Order Cycle time
b) Transportation cost
c) Sensitivity of the product
d) Order sizes
2) Product positioned:
a) Perishability of the raw materials
b) Number of products in the product mix
c) Assortments ordered by the customers from the
d) Transportation consolidation rates
3) Intermediately positioned: 9
11. Warehousing Strategy
Other qualitative factors that should be considered include:
1) presence synergies: Inventory located nearby in a
building that is clearly affiliated with the enterprise.
2) industry synergies: Refer to the operating benefits
of collocating with other firms serving the same
3) operating flexibility: Refers to the ability to adjust
internal policies and procedures to meet product and
customer needs. 11
12. 4) location flexibility: Refers to the ability to quickly
adjust warehouse location and number in accordance
with seasonal or permanent demand changes.
5) scale economies: Refer to the ability to reduce
material-handling and storage through application of
A physical resource that a firm holds in stock with the intent
of selling it or transforming it into a more valuable state.
A set of policies and controls that monitors levels of inventory
and determines what levels should be maintained, when stock
should be replenished, and how large orders should be
15. Functions of Inventory
1. To separate various parts of the production process
2. To decouple the firm from fluctuations in demand and
provide a stock of goods that will provide a selection for
3. To take advantage of quantity discounts
4. To hedge against inflation
16. Types of Inventory
Purchased but not processed
Undergone some change but not completed
A function of cycle time for a product
Necessary to keep machinery and processes productive
Completed product awaiting shipment
17. The Material Flow Cycle
Input Wait for Wait to Move Wait in queue Setup Run Output
inspection be moved time for operator time time
21. 1. Cycle Stock :
Because of the economies of scale involved in production and
transportation it makes sense to produce and transport goods in
batches. The is called as cycle stock. 2. Safety stock :
It is a safeguard against the uncertainties of demand and supply.
3.Pipe line stock:
Since production and transportation activities take certain finite
time, firms need to carry pipeline or in transit stock. Pipeline stock
consist of good usually being worked upon (WIP) or being moved from
one location to another in the chain ( In transit Inventory).
22. 4. Decoupling Stock:
Since it is not possible to carry out supply chain operation with
just one decision maker, the entire supply chain is usually divided into
various decision making unit, the demarcation of decision making unit
take place at both organizational and departmental boundaries, so it
is not uncommon for organizational to hold large inventories at
organizational as well as departmental level. This becomes decoupling
inventories. So that flexibility at each level can be made
5. Dead Stock:
It refers to that part of the stock , that remain dormant or non
moved over a long period of time .
23. 6. Anticipation Stock :
It consist of stock accumulated in advance of expected peak in
sales or to take care of some special event that does not occur
on regular basis.
It is of two types
1. Seasonal Stock
2. Speculation Stock
24. Distribution of presentation
Name Slide No Roll # NO
Sohail Nadeem 3,4,5,6 15
M. Amir Sohail 7,8,9 59
Sirfraz Riaz 10,11,12 45
Asim Iqbal 13,14,15 199
M.Zeshan 16,17 135
Malik Shahbaz 18,19 69
M.Waqas Tariq 20,21,22 123
M.Zahid 23,24 43
Note : Please preparation every one own slide and Number
don change at the time of presentation