CISM02 Unit 8
Inventory Systems
Dr Valentina Plekhanova
CISM02: Decision Support for Management
Unit 8
Unit 8: Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
To understand the inventory problems
To be able to distinguish between a variety of the major stock costs
To understand the nature of demands
To understand the simple Economic Order Quantity (EOQ) model
To construct an algebraic model for a simple inventory system
To be able to apply inventory models to the practical problems
To be able to explain the limitations of inventory control models
CISM02 Decision Support for Management
Unit 8
2
1
Inventory
Inventory: Stock of items for internal or external demand.
Tools, machinery , equipment
Raw materials
Working capital
Finished goods
The purpose of inventory management is to determine the amount of inventory to keep in stock.
CISM02 Decision Support for Management
Unit 8
3
Inventory Management
The word inventory was first recorded in 1601. The French term inventaire, or
"detailed list of goods," dates back to 1415.
Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods.
The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. CISM02 Decision Support for Management
Unit 8
4
2
Basic Inventory Problem
Any inventory problem gives an answer to the following questions:
How much to order?
When to order?
CISM02 Decision Support for Management
Unit 8
5
Dr Valentina Plekhanova
CISM02: Decision Support for Management
Unit 8
Unit 8: Learning Outcomes
1.
2.
3.
4.
5.
6.
7.
To understand the inventory problems
To be able to distinguish between a variety of the major stock costs
To understand the nature of demands
To understand the simple Economic Order Quantity (EOQ) model
To construct an algebraic model for a simple inventory system
To be able to apply inventory models to the practical problems
To be able to explain the limitations of inventory control models
CISM02 Decision Support for Management
Unit 8
2
1
Inventory
Inventory: Stock of items for internal or external demand.
Tools, machinery , equipment
Raw materials
Working capital
Finished goods
The purpose of inventory management is to determine the amount of inventory to keep in stock.
CISM02 Decision Support for Management
Unit 8
3
Inventory Management
The word inventory was first recorded in 1601. The French term inventaire, or
"detailed list of goods," dates back to 1415.
Inventory management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods.
The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. CISM02 Decision Support for Management
Unit 8
4
2
Basic Inventory Problem
Any inventory problem gives an answer to the following questions:
How much to order?
When to order?
CISM02 Decision Support for Management
Unit 8
5