Global functions of inventory types of inventory inventory management abc analysis record accuracy cycle counting control of service inventories 12 2 outline continued inventory models independent vs. Pdf theory of inventory management based on demand forecasting. Inventory control is the process of ensuring your firm has an adequate supply of products and a wide enough assortment of them meet your customers needs. Chap 12 inventory management inventory supply chain. If demand is greater than forecast or supply is late, a stock shortage will.
The two types of demand are independent demand and dependant demand for inventories. Now customize the name of a clipboard to store your clips. Chapter 12 independent demand inventory management ppt. Inventory and supply chain management bullwhip effect demand information is distorted as it moves away from the enduse customer higher safety stock inventories to are stored to compensate seasonal or cyclical demand inventory provides independence from vendors take advantage of price discounts inventory provides independence between stages and. Additional stocks are sometimes built up to meet seasonal or cyclical demand. Operations management chapter 12 chapter inventory management inventory 12 1 outline global company profile. Abc inventory classifications often classifies inventory according to dollar value rmunit x annual usage rate.
The demands for goods are made by buyers and are met by sellers, regardless of whether monetary exchange is involved. Operations management an integrated approach semantic scholar. Chapter 9 inventory management inventory commercial. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Independent demand inventory is called distribution inventory while dependent demand inventory is known as manufacturing inventory. Bob has already performed a forecast for future demand for the plates. Inventory management outline introduction need for inventories order quantity eoq model order point pricing of raw materials and valuation of stocks. Chapters 6 to 8 are the elixir of item level stock control, the secret recipe for success. Inventory management is the branch of business management that covers the planning and. Inventory management deals essentially with balancing the inventory levels. Receipt of inventory is instantaneous and complete 4. Quantity discountsalso known as price break models. The following table contains figures on the monthly volume and unit costs for a random sample of 16 items for a list of 2,000 inventory items. Inventory control models assume that demand for an item is.
Learn chapter 12 test inventory management with free interactive flashcards. Chapter 12 inventory management 1 linkedin slideshare. Recognize the presence of economies of scale in inventory management and understand the impact of product variety on. The discussion follows on to the detail of item level inventory manage ment, the essence of real inventory management. The demand for a product in inventory is the number of units that will need to be withdrawn from inventory for some use e. Part 2 managing customer demand 283 8 forecasting 283 9 inventory. Once you have completed the test, click on submit answers for grading to get your results. The rate of use of independent demand is most often determined by the market place. Year period demand in million year period demand in million 1 spring 15 3 spring 20 summer 25 summer 30. Intuitively, in a centralized distribution system, whenever demand from one market area is higher than average while demand in another market area is lower than average,items in the warehouses that are originally allocated for one.
Maddux 198 chapter 12 inventory management 4 5 average monthly demand. Inventory management inventory meaning independent demand vs dependent demand types of inventory functions of inventory objectives of inventory requirements for effective inventory management. The most common ways to measure inventory are in units, dollars, weeks of supply, and inventory returns. What are purchased items or extracted materials that will be transformed into components or products called. What is the annual inventory and distribution cost of the current distribution system. Aug 20, 2017 abc inventory, economic order quantity, eoq, demand during lead time, service level, how to read z table, how to calculate z score using probability in excel.
Demand for sporting goods for sports, golf, swimming different types of clothing, food, and heating and cooling systems example b. Chapter 12 independent demand inventory management. Chapter 12 supply chain management and multiechelon. An inventory of an item is said to be falling into the. An inventory of an item is said to be falling into the category of independent. Attention to wellrounded detail and depth from different approaches makes the handbook of global supply chain management a critical acquisition for any serious collegelevel collection offering grad students and researchers detailed perspectives on the subject. Clipping is a handy way to collect important slides you want to go back to later.
Chapter 12 inventory management 12 2 solutions continued 2. Choose from 500 different sets of chapter 12 test inventory management flashcards on quizlet. Inventory model basic eoq model epq model fixed time period model reorder model single period model inventory is the stock of any item or resources used in an organization an inventory. Yet, chapter 14s similar presentation and discussion of mrp specified that mrp systems assume dependent demand. Evaluate optimal order quantities and performance measures with the eoq model lo122. Nonetheless, the important finding is that abc analysis did find the significant few.
Independent demand finished goods, items that are ready to be sold. The demand for a certain soft drink in the past four years in given in following on a quarterly basis. What are the savings that would result from following the task force recommendation and setting up an ndc. In the previous chapters, we have discussed priority and capacity. Demand forecasting is part of a companys overall inventory control activities. Inventory management deterministic models systems and operations management study guide, ardavan asefvaziri 2 what we have ordered, we start using the inventory of the second bin.
Inventory models for independent demand basic economic order quantity production order quantity quantity discount model need to determine when and how much to order basic eoq model 1. Independent demand finished products and the numbers are influenced by the market conditions. Chapter 12 stochastic inventory theory sciencedirect. Chap012 chapter 12 inventory management true false. Ppt chapter 12 inventory planning and control powerpoint. Inventory management chapter 12 309 the dollar usage percentages dont exactly match the predictions of abc analysis. Raw materialthose items that are to be converted into product workinprocess wipthose items that are in the pro cess of being converted finished goodsthose completed items for which title has not been transferred mromaintenance, repair. Independent demand is for a finished product and dependent demand is for components. This chapter focuses on inventory management and control of independent demand items using statistical inventory control techniques. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Chapter 12 inventory management flashcards quizlet.
Inventory management economic order quantity youtube. Operations management an integrated approach semantic. Chapter 16 inventory management 3 large amounts of inventory sometimes purchased to take advantage of discounts. Inventories are held for a variety of reasons, such as meeting anticipated demand, smoothing production, decoupling internal operations, protecting against stockouts, taking advantage of quantity discounts, and hedging against price increases. Inventories are held and used by the firm for a num ber of reasons. Independent demand demand for item is independent of demand for any other item in inventory. Dependent demand basic fixedorder quantity models basic fixedtime period model we will omit. Independent demand inventory management multiple choice 1. Vendor managed inventory vmi is where the vendor is responsible for the.
Reservations provided by an airline for a particular flight. Session chapter 12 chopra 5thed free download as powerpoint presentation. A company wishes to determine the eoq for an item that has an annual demand of 2,000 units, a. Operations management chapter 12 inventory management powerpoint presentation to accompany heizerrender principles of operations management, 7e operations management, 9e 2008 prentice hall, inc. Chapter 12 chapter inventory management key ideas 1. Types of inventories independent and dependant demand. It is proposed to use inventory management in order to decrease stock levels and to apply an agent system for apr 01, 2017 free download inventory management ppt with pdf. Microsoft powerpoint chapter 12 inventory management 8th ed 2011. Chapter 12 independent demand inventory management flashcards. We will then move on to the role of sales forecasting management within demand management.
Abc classification defines the degree of importance for inventory. Learning objectives describe the different types and uses of inventory describe the objectives of inventory management calculate inventory performance. Pdf matching supply with demand an introduction to. Part ii of the book looks at independent demand inventory methods. Two forms of demand dependent demand next chapter parts that go into the finished products dependent demand is a known function of independent demand calculate instead of forecast managed using a requirements philosophy, i. Chapter 12 independent demand inventory management types of inventory raw materials components work in progress finished goods distribution inventory maintenance, repair, and operating supplies how inventory is used by companies anticipation or seasonal inventory o supply anticipated new product release or seasonal demand safety stock o buffer against fluctuations in demand. If demand is greater than forecast or supply is late, a stock shortage will occur. Jan 02, 2014 describe situations in which the singleperiod model would be appropriate, and solve typical problems. The concepts of dependent and independent inventory systems are very important. Operations management a supply chain process approach 1st. For the love of physics walter lewin may 16, 2011 duration.
Inventory functions safety stock an additional quantity of stock kept in inventory to protect against unexpected fluctuations in demands andor supply. One of the underlying assumptions from chapter 12 s discussion of eoq, production run, and other models is that demand for inventory is independent. Inventory is categorized into two types based on the demand pattern, which creates the need for inventory. Try the multiple choice questions below to test your knowledge of this chapter. Chapter independent demand inventory management 12 types of inventory page 2 uses of inventory. The mathematical inventory models used with this approach can be divided into two broad categoriesdeterministic models and stochastic modelsaccording to the predictability of demandinvolved. One of the goals of inventory management is to avoid stockouts. Purchased items or extracted materials transformed into components or products. Chapter 12 independent demand inventory management is the property of its rightful owner. In the quantity discount model, if holding costs are given as a percentage of unit price, a graph of the total cost curves will have the same eoq for each curve. Inventory management is obliged for the goods in inventory, also to their inward flow and outward flow. Notes chapter 12 independent demand inventory management. Chapter 12 inventory planning and control 1 chapter 12 inventory planning and control. As the inventory manager, bob takes into consideration his dependent demand items and his independent demand items.
Chapter 12 inventory management 122 solutions continued 2. Independent demand inventory management systems chapter 8. Chapter 12 supply chain management and multiechelon inventories 12. System using p and q system in practice abc inventory management. Material flow analysis and facility layouts chapter 9. Chapter 12 inventory management with steady demand operationsmanagement,1st. Forecast demand independently for each item based on usage history establish lot sizes independently for each item based on demand forecasts establish safety stocks independently for each item based on forecast errors which make the following assumptions. Evaluate the savings as the correlation coefficient of demand in any pair of regions varies from 0 to 0. If demand not known with certainty, safety buffer stocks are kept on hand.
Theory of inventory management based on demand forecasting article pdf available in polish journal of management studies 31. Start studying chapter 12 independent demand inventory management. If so, share your ppt presentation slides online with. Inventory theory deals with the management of stock levels of goods, with the intent of effectively meeting demands for those goods.
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