What is inventory?

Stock of tems keep to meet future demand

Purpose of inventory managment STOCK
KEEPING
o How many units to order
UNITS
o When to order

Supply Chain Managment

Bullwhip effect (efecto porci)
o Demand information is distored as it moves away from the end-use
customer
o Higher safety stock inventories to are stored to compensate
Seasonal or cyclical demand
Inventory provides Independence from vendors
Take advantage of Price discounts between stages and avoids work
stoppages

Types of inventory
Row materials
Purchased parts and supplies
Work-in-proces (partially completed) products (WIP)
Items being transported
Tools and equipment

Two forms of demand

Dependent
o Demand for tems used used to produce final products
o Tires for cars are indepedent demand tem
Independent
o The complete product
 Inventary Costs
Carrying cost
o Cost of holding an tem in inventory
Ordering cost (import)
o Cost of repleishing inventory
Shortage cost
o Temporary or permanent loss of sales when demand cannot be met

Inventory control systems

Continuous system (fixed-order-quantity)
o Constant amount ordered when inventory declines to predetermined
level
Periodic system (fixed-time-period)
o Order placed for variable amount per fixed package of time

ABC classification
Class A (is more convenient to have this inventary)
o 5- 15% sales of units, represent the 70-80% of value sales
Class B
o 30% of units, represent the 15% of value
Class C
o 50-60% of units, represent the 5-10% of value
o

Economic Order Quantity (EOQ) Models

EOQ
o Optimal order quantity that will minimize total inventory costs
Basic EOQ model

Assumptions of Basic EOQ Model

Demand is known with certainly and is constant over time

No shortages are allowed
Lead time for the receiptof order is constant
Order quantity is received all at once
Lead time: tiempo que tarda el proveedor en entregar un producto

Safety Stock

Safety Stock
o Buffer addes to on and inventory during lead time
Stockout
o An inventory storage
Service level
o Probability that the inventory available during lead time
o Cost
o Demand