Supply_Chain_8.ppt

Supply Chain Management--Suqian Zha Inventory strategy * Inventory strategy * Customer Service goals Inventory Strategy Forecasting Inventory decision Purchasing and supply scheduling decision Transport Strategy Modes of transport Transport decision Location Strategy Location decision The network planning process What is inventory? Inventories are stockpiles of raw materials, supplies, components ,work in process, and finished goods that appear at numerous points throughout a firm’s production and logistics channel. Inventories are frequently found in such places as warehouses, yards, shop floors, transportation equipment, and on retail store shelves Having these inventories on hand can cost bewteen 20 and 40 percent of their value per year. Stock can tie up a large amount of business captial , therefore, carefully managing inventory levels makes good economic sense. Purpose of inventory Improve customer service To meet variation in product demand. Demand is variable, therefore, a safety or buffer stock must be maintained to absorb variation To provide a safeguard for variation in raw material delivery time. To take advantage of economic purchase order size. There are costs to place an order: labor, phone calls, typing ,postage and so on. Therefore, the larger each order is ,the fewer the orders that need be written. Shipping costs favor larger orders —the larger the shipment, the lower the per-unit cost. Types of inventory: Procurement of raw material Raw material inventory Production stage 1 Work-in-process inventory 1 Work-in-process inventory 2 Production stage 2 Production stage S Finished goods inventory Sales of finished goods Manufacturing area Plant and machine spares Consumables Inventories may be in the pipeline. Stock may be held for speculation Stocks may be regular or cyclical Inventory may be created as a hedge against the variability in demand Inventory may be referred to as obsolete, dead or shrinkage stock. Inventory control involves controll