MANAGING INVENTORY AND WORK SECTION-C CUHP13MBA83-92
MANAGING INVENTORY AND WORK
SECTION-C
CUHP13MBA83-92
CONTENTS
Work Study and Measurement
Inventory Management
Productivity and Efficiency
Work Study and Measurement
WORK STUDY is that body of knowledge concerned with:
the analysis of the work methods and the equipment used in performing a job
the design of an optimum work method
the standardization of proposed work methods
Work Study and Measurement Objectives
To analyze the present method of doing a job, systematically in order to develop a new and better method
• Present to better and efficient future.
To measure the work content of a job by measuring the time required to do the job for a qualified worker and hence to establish standard time
• Set the standards
To increase the productivity by ensuring the best possible use of human, machine and material resources and to achieve best quality product/ service at minimum possible cost
• Efficient production
Work Study and Measurement
BENIFITSIncreased productivity and operational efficiency
Reduced manufacturing costs
Improved work place layout
Better manpower planning and capacity planning
Fair wages to employees
Better working conditions to employees
Improved work flow
Reduced material handling costs
Work Study and Measurement WORK MEASUREMENT:
Work measurement is concerned with investigating, reducing and eliminating ineffective time, whatever may be the cause.
• eliminating ineffective time
WM is the means of measuring the time taken in the performance of an operation or series of operations in such a way that the ineffective time is shown up and can be separated out.
• means of measuring the time taken
WM is also used to set standard times to carry out the work, so that any ineffective time is not included later
• set standard times to carry out the work
Inventory Management Inventory is an itemized list of current assets: as
(1): a catalog of the property of an individual or estate.
(2): a list of goods on hand.
(Merriam-Webster’s dictionary
In business……
The term ‘Inventory’ refers to any item of property held in stock by a firm, including –
c) finished goods held for
sale
a) raw- materials b) goods in the process of production
In finance…… Inventories appear on a company's balance sheet as assets.
Inventory turnover, which indicates the rate at which goods are converted into cash, is a key factor in appraising a firm's financial condition.
For financial statements, inventories may be priced either at cost or at market value.
Important Inventory Issues
How much to order?
When to order?
From where to order?
When to supply?
FUNCTIONS OF INVENTORY
Separation of the firm from fluctuations in demand.
Separating the production process from the suppliers.
To hedge against inflation.
Benefit of buying in bulk quantities.
TYPES OF INVENTORY
FINISHED GOODS inventory
processing
Work-in-process
inventory
Maintenance/repair or operating inventory
The Material Flow Cycle
WAIT FOR
INSPECTION
WAIT TO BE MOVE
D
MOVE TIME
WAIT IN QUEUE
FOR OPERAT
OR
SET UP
TIME
RUN TIME
INPUT OUTPUT
INVENTORY MANAGEMENT
It considers following main points:
a) How inventory items can be classified?
i.e., ABC Analysis
b) How accurate inventory records can be maintained?
c) How to maintain and manage a proper level of stock to avoid under stock or overstock?
Inventory Control through ABC Analysis
Follows “Pareto principle” which states that there are “a critical few and trivial many”.
Classification of items into ‘A’ items, ‘B’ items and ‘C’ items on the basis of their value of consumption.
It concentrates on important items, i.e., Control by Importance and Exception.
FNSD Analysis- division of items into four categories
Fast moving items
Normal moving items
Slow moving items
Dead items
F
N
S
D
Stocks of such items are consumed in a short span of time. Stocks of fast moving items must be observed constantly and replenishment orders be placed in time to avoid stock-out situations.
Such items are exhausted over a period of a war or so. The order levels and quantities for such items should be on the basis of a new estimate of future demand to minimize the risks of a surplus stock.. Existing stock of which would last for two years or more at the current rate of usage but it is still expected to be used up..
For its existing stock no further demand can before seen. Dead stock figures in the inventory represents money spent that cannot be realized but it occupies useful space
VED ANALYSIS
V stands for Vital items. and their stock analysis requires more attention, because out-of-stock situation will result in stoppage of production
E stands for Essential items. Such items are considered essential for efficient running but without these items the system would not fail. D stands for
desirable items which do not immediately but availability of these items will lead to more efficiency and less fatigue.
Record Accuracy Inventory Record Accuracy (IRA) is a measure of how closely official inventory
records match the physical inventory. Many managers equate Inventory Record Accuracy with cycle counting, but there is a lot more to it than just counting.
WHY IT IS IMPORTANT?
Its aim is to ensure proper maintenance of incoming and outgoing record keeping.
Stock outs interrupt production and create delivery delays.
People waste hours looking for misplaced or missing items.
When stock outs are frequent, inventory rises to compensate. This unnecessary inventory requires space and capital.
EXAMPLE -Buker, Inc. has been a worldwide leader in helping companies achieve inventory record accuracy. Every Buker client company for the last twenty-five (25) years has achieved 95-98% inventory accuracy and has eliminated their need to conduct a physical inventory.
LEVEL SETTING
Minimum level
Maximum level
Re-ordering level
Danger level
Average stock level
Safety stock level
JUST-IN-TIME INVENTORY SYSTEM KANBAN System
Ordering as per requirement and demand
Reduced carrying costs
Reduction in investment in inventory
No in-process inventory
MATERIAL TURNOVER RATIO
Cost of materials consumed during the period
=
Cost of average stock held during the period
We can get:
-Slow moving stocks
-Dormant stocks
-Obsolete stocks
Productivity and Efficiency
Single-factor measures Output / (Single Input)
All-factors measure Output / (Total Inputs)
Single-factor Output Output Output Outputmeasures Labor Machine Capital Energy
All-factors Output measure All inputs
Productivity = Outputs
Inputs
Productivity and Efficiency factors that affect productivity
Training Methods
Technology Management
Productivity and Efficiency
Efficiency: A level of performance that describes a process that uses the lowest amount of inputs to create the greatest amount of output
It is the Greatest human satisfaction from scarce resources.
Allocative Efficiency Production Efficiency Dynamic Efficiency Economic Efficiency
References
Hezier, Jay and Render , Barry. OPERATIONS MANAGEMENT, (10th edition) Pearson :New Delhi. Chapter 12th page -497
Brennan ,Linda L. OPERATIONS MANAGEMENT, The Tata McGraw Hill 36hours course. Chapter 12 page-208
Stevenson, W.J (1999), PRODUCTION OPERATIONS MANAGEMENT, Irwin McGraw – Hill : New York Chapter 13 page –(554-614).
Thank You