Inventory Management

INVENTORY MANAGEMENT

GROUP MEMBERS:Aparna SambamurthiUlka BhisaleAkshay SadekarSayali SukhthankarBhushan SadaphulePrathamesh DeoKomal Satve

Pooja DhamankarRuksana PathanBhakti NalavadeTruptee SalunkheKrupali DandekarSmita BaneDarshana NaikRia Gupta

Inventory Management

INVENTORY MANAGEMENT

DEFINITION:

Inventory management, or inventory control, is an attempt to balance inventory needs and requirements with the need to minimize costs resulting from obtaining and holding inventory.

WHAT IS INVENTORY?

•Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business.

•Inventory may be defined as ‘”usable but idle resource”

INVENTORY

WHY KEEP INVENTORY ?

JAN FEB MAR APR MAY JUN

Demand 50 50 0 100 200 200

Produce 100 100 100 100 100 100

Month-end inventory

50 100 200 200 100 0

WHY KEEP INVENTORY ?

MEET DEMAND KEEP OPERATIONS RUNNING LEAD TIME HEDGE QUANTITY DISCOUNT SMOOTHING REQUIREMENTS

TYPES OF INVENTORY

Transit Inventory Buffer Inventory Anticipation Inventory Decoupling Inventory MRO Goods Inventory

FLOW OF INVENTORY

OBJECTIVES OF INVENTORY MANAGEMENT

Provide the desired level of customer service

Achieve cost-efficient operations

Minimize inventory investment

Production control

Balancing

PRICING OF RAW MATERIALS

Several methods are used for pricing inventories used in

production. The important ones are :

1) First-in first-out (FIFO) method 2) Last-in first-out (LIFO) method 3) Weighted average cost method 4) Standard cost (price) method

Contd….

FIFO METHOD

LIFO METHOD

Weighted average cost method

Standard cost (price) method

INVENTORY CONTROL SYSTEMS

ABC Analysis VED Analysis GOLF Analysis HML Analysis SDE Analysis

VARIOUS COSTS RELATED TO INVENTORY MANAGEMENT: 

ORDERING COST

CARRYING COST

INVENTORY MANAGEMENT MODELS

PUSH MODEL Economic Order Quantity (EOQ) MRP-1 MRP-2PULL MODEL JIT KANBAN

EOQ

How much should be ordered? Economic Order Quantity (EOQ)

When should it be ordered? Re - order point Safety stock level

INVENTORY MANAGEMENT:Computerized applications  

Computerized applications  

MRP-1 (Material Requirement Planning)

MRP is a tool to deal with these problem provides answers for several questions:

What items are required? How many are required? When are they required?

Outputs 

There are two outputs and a variety of messages/reports:

Output 1 is the "Recommended Production Schedule"

Output 2 is the "Recommended Purchasing Schedule".

Problems of MRP  integrity of the data Need high level of discipline Cost of software

MRP 2 (Material Resource Planning) 

Co-ordination of entire manufacturing production

Developing a master schedule plan Feedback system Resource scheduling Batching Software extension programs Data accuracy

PULL MODEL

Just-in-time system (JIT)

JIT II

JIT Activity should not take place until there is a need

for it. It is characterised by maintaining zero inventories. Involves close coordination between buyers and

suppliers. Prerequisites of a successful system: Buyer-seller partnership Online communication and information sharing Commitment to zero defects from both the sides Frequent and small lot size shipments

JIT II

Vendor managed inventory, was made popular by Bose corporation

Supplier takes charge of inventory management of the product and manage the replenishment process based on the consumption pattern of the consumer.

Use EDI

3 essential things for the success of JIT II: Right partner Right set of products Mutual trust

Techniques used in JIT

Pokayoke Kanban TPM Jidoka Single minute exchange of dies

(SMED)

How to Reduce Inventory Cost

Enhance your Planning Forecasting and Analysis Use Inventory Management Systems Lowering the Company's Inventory Holding

Cost  Lead Time Reduction Enhance the Management Structure

CASE STUDY 1

SPECTRA MOTORS LTD

INTRODUCTION AND INVENTORY MANAGEMENT

MARUTI SUZUKI INDIA LTD

MARUTI SUZUKI INDIA LTD

SPECTRA MOTOERS

LTD

SAI SERVICE AUTO VISTA

GOREGAON BORIVALI GHATKOPAR THANE

VITTESS

SPECTRA MOTORS LTD

LOCATION SPACE COST INSURANCE ALLOTEMENT OF VEHICLE

QUESTIONNARE

HOW THEY MANAGE THEIR INVENTORY STOCK?

WHAT ARE THEIR INVENTORIES?

WHO ARE THEIR SUPPLIERS?

WHAT SYSTEM DID THEY FOLLOW FOR MANAGING THEIR STOCK OF GOODS

CONTINUE…….

WHAT IS PDI SYSTEM ?

HOW MUCH COST THEY OCCURE FOR KEEPING THE INVENTORY?

HOW MANY PERSONEL EMPLOYED IN THEIR STOCKYARD?