Warehouse & Inventory Management

Warehouses

• Store inventory for a period of time

Storage

protection

• Inventory may be turned over rapidly

distribution center

customer service

• Receive goods

• Identify goods

• Dispatch goods to storage

• Hold goods

• Pick goods

• Dispatch the shipment

• Operate an information system

Warehouse Activities

INVENTORY MANAGEMENT

Definitions:

Inventory-

A physical resource that a firm holds in stock with the intent of selling it

or transforming it into a more valuable state.

Inventory System-

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

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

customers

3. To take advantage of quantity discounts

4. To hedge against inflation

Types of Inventory

Raw materialPurchased but not processed

Work-in-process Undergone some change but not completed A function of cycle time for a product

Maintenance/repair/operating (MRO) Necessary to keep machinery and processes productive

Finished goods Completed product awaiting shipment

The Material Flow Cycle

Input Wait for Wait to Move Wait in queue Setup Run Outputinspection be moved time for operator time time

Cycle time

95% 5%

Inventory Management

How inventory items can be classified?

How accurate inventory records can be maintained?

• Improve customer service

• Transportation savings

• Hedge against future

• Unplanned shocks (labor strikes, natural disasters, surges in demand, etc.)

• To maintain independence of supply chain

Why hold inventory?

Dead stock

Anticipation inventory

Cycle stock Safety stock

Pipeline stock

Decoupling stock

Categories of Inventory

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).

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 .

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

Thank you