Chapter 2 Inventory_1.pptx Chapter 2 Inventory_1.pptx

Chapter 2 Inventory_1.pptx

1. CHAPTER 2 1

2. 2 4 July 202 4 Midterm - Thursday 10 July 2024 Assignment – Wednesday 17 July 202 4 FINAL EXAM – Wedenesday

3. We will spend more time talking about the different types of stock Communication about inventory management within companies and between companies is a persistent problem, we need a complete vocabulary with precision to improve the situation. We often hear of projects to reduce inventory, and many times they are successful. We rarely hear careful specificity regarding which types of stock were reduced, yet it has a huge impact on the short- term and long- term implications of the stock reduction. 3

4. For example, some erroneously believe that as long as safety stock is not reduced, service levels will remain unchanged. Generally, this is a fallacy that is a result of a narrow view of service 4

5. IF THE DEFINITION OF SERVICE IS THAT 4 SERVICE is the frequency with which we run out of stock during the protection period, such as the lead time, then that is true. If it is the total amount of demand fulfilled from inventory, then it is wrong. REDUCING cycle stock hurts service level as we learn later in the chapter.

6. In managing inventory, it is crucial to communicate clearly on what you are talking about. TYPES OF INVENTORY 5

7. A COUPLE OF DIFFERENT TYPES OF REPLENISHMENT PROCESSES Regarding service level measures, we begin by using (1) protection period in- stock (PPIS) metric and (2) item- level fill rate (ILFR) metric. Regarding replenishment processes, we begin by using (1) the fixed order point, fixed order quantity (Q,ROP) process, and the fixed order interval, order up to level (T,OUL) process. 7

8. (PPIS) (ILFR) (Q,ROP) (T,OUL) 8

9. Protection Period In-Stock (PPIS) metric 9

10. Item- Level Fill Rate (ILFR) metric. 10

11. The fixed order point, fixed order quantity (Q,ROP) process. 11

12. The fixed order interval, Order Up to Level (T,OUL) process 12

13. Protection period is the interval of time over which a stockout is possible. This may seem odd since it would appear that you could stockout anytime; however, this is not the case. 13

14. In that process you order Q when the inventory position reaches the ROP. 1 2 If the ROP > 0, it is not possible to stockout prior to reaching the ROP, by definition. 3 However, you can stockout after you reach the ROP. 4 As soon as you hit the ROP, you place an order. 14

15. The time between when the order is placed and the order is received and available for use is the lead time (L). So, with the (Q,ROP) process the protection period is the lead time. Now we can define the PPIS metric for the (Q,ROP) process— namely, the PPIS for the (Q,ROP) process is the probability of a stockout during the lead time. 15

16. For the (T,OUL) process, you only order when you get to the reorder times, which are spaced out by T periods of time. So, suppose you are at one of the reorder times, and you calculate the difference between the OUL and the inventory and order that quantity. Then you wait for the lead time to receive the order. 16

17. You cannot order again until you reach the next reorder time. Once you place your order, you can stockout anytime between order times and the lead time. Hence, for the (T,OUL) replenishment process the protection period is T + L and the PPIS is the probability of a stockout during T + L. 17

18. The item- level fill rate (ILFR) is the percentage of demand fulfilled from on-hand inventory. If demand is not fulfilled from on-hand inventory, the demand is either lost (lost sales) or back-ordered. In either case, that is the demand loss at that time. So, the total demand loss over a period of time divided by the total demand over that time is the ILFR. 18

19. Cycle stock is the amount of inventory between replenishments. CYCLE STOCK 18

20. The average amount of inventory between replenishments is (Q+1)/2 for discrete units 7 (such as cartons of ready- to- eat cereal) and Q/2 for continuous units (such as gallons of gasoline). 20

21. The average amount of inventory between replenishments is T × d / 2, where d is average demand per unit of time. 21

22. If a company always orders in truckload quantities, the average cycle stock is the truckload quantity divided by two; if the company always orders a pallet, the average cycle stock is the pallet quantity divided by two. 22

23. Each pallet has 150 cases, and each case has 6 bottles. Assume that the stores only order in case pack quantities from the distribution center. Suppose there are 2 distribution centers and 200 stores. The number of bottles per pallet is 6 × 150 = 900 bottles Average cycle stock per distribution center is 900 bottles / 2 = 450 bottles. 23

24. Since there are two distribution centers, the average cycle stock in the distribution centers combined is 900 bottles. The average cycle stock per store is 6 + 1 bottles / 2 = 3.5 bottles. Since there are 200 stores we have 200 stores × 3.5 bottles per store = 700 bottles. The total cycle stock in the retail network is 700 bottles plus 450 bottles = 1,150 bottles. 24

25. Historical safety stock is the average amount of inventory on hand when the replenishment arrives and is available for use. 25

26. The assumed replenishment process in the safety stock calculation is different from the actual replenishment process, The assumed distribution of demand is different from the actual distribution, or the demand is nonstationary The actual lead time distribution differs from the lead time distribution, if it even exists, or Other types of execution errors exist that are not accounted for in the forward- looking safety stock calculation. 26

27. In- transit stock is inventory that is not being stored for later use or sale but is en route to an inventory holding node. 27

28. The most obvious in-transit stock is inventory that is in a transportation unit, such as on a Truck Train Ship Airplane. 28

29. For example, if inventory is held in a truck trailer for sale directly from the truck trailer, it is not in- transit stock; the truck trailer is actually an inventory holding node. 29

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31. 31 We refer to in- transit stock that is being transported as in- transport stock. In- transit stock that is being cross docked, staged, picked, put away, and so on, we refer to as in- non- transport stock. So, in- transit stock has in- transport and in- non- transport stock.

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33. Lead time in supply chain management refers to the amount of time that elapses between the initiation of a process and its completion. It encompasses all the time taken from the moment a customer places an order until the product is delivered to them. Lead time is critical in supply chain management because it affects inventory levels, customer satisfaction, and overall operational efficiency. 33

34. Having the correct lead time is important because it is used to make safety stock calculations and determine the correct time to place orders. When lead time is not correct in an automated replenishment system, it can result in either excess inventory or stockouts. 34

35. When ocean carriage is used, the in- transit stock naturally is much higher than when air carriage is used. For ocean carriage, most likely the preponderance of the lead time is the transit time, whereas in air carriage, that might not be the situation. 35

36. There are several types of lead times in a supply chain: Order Lead Time: The time taken from order placement to order delivery. Supply Lead Time: The time taken by suppliers to deliver raw materials or components after an order is placed. Manufacturing Lead Time: The time required to produce an item from raw materials or components. Delivery Lead Time: The time taken to transport finished products to the customer or end destination. 36

37. Managing lead time effectively can help reduce costs, improve service levels, and increase competitive advantage. Techniques to manage and reduce lead times include better forecasting, inventory management, supplier relationships, and process optimization. 37

38. Promotional stock refers to the inventory set aside specifically for promotional activities, such as sales, special offers, discounts, or marketing campaigns. These promotions aim to attract customers, boost sales, and increase brand awareness. Managing promotional stock effectively is crucial for the success of these activities. 38

39. Key aspects of promotional stock management include: Forecasting Demand: Estimating the expected increase in demand due to the promotion to ensure sufficient stock is available. Inventory Planning: Allocating the right amount of stock to avoid overstocking or stockouts, which can lead to missed sales opportunities or excess inventory. Coordination with Suppliers: Ensuring that suppliers can meet the increased demand during the promotional period. Logistics and Distribution: Planning the distribution and logistics to ensure timely delivery of promotional stock to the required locations. Monitoring and Adjustment: Continuously monitoring sales and inventory levels during the promotion to make real-time adjustments if necessary. 39

40. There are two categories of promotional stock: a promoted SKU that is continuously in the assortment, and a promoted SKU that is not carried continuously 40

41. There are many different types of promotions: temporary price reductions, promotional displays, buy one get one free, bonus packs, coupons, samplings, signage, extra inventory in the store, and many others. Many times these are used in combination with one another. For example, a temporary price reduction might be coupled with a promotional display and extra inventory. 41

42. Inventory held for the purposes of demonstration or display is called demonstration stock. DEMONSTRATION STOCK 37

43. If it cannot be sold, even if out of stock of the item, it is technically not a part of safety stock If it can be sold in the case of an out of stock, it really is a part of safety stock. In that case, the safety stock is actually higher than the planned safety stock, and both the ILFR and the PPIS are actually higher than planned. Demonstration stock can be viewed as a part of safety stock for cost and service calculations 38

44. Demonstration stock, also known as demo stock, refers to the inventory allocated for the purpose of product demonstrations, samples, trials, or displays. This type of stock is typically used to give potential customers a hands-on experience with the product, allowing them to see, touch, and test the product before making a purchase decision. Demonstration stock is commonly utilized in retail stores, trade shows, exhibitions, and other marketing events. 38

45. Key considerations for managing demonstration stock include: Allocation: Determining the right amount of stock to allocate for demonstrations to ensure there is enough to meet demand without impacting regular sales inventory. Condition Maintenance: Ensuring that demonstration products are kept in good condition, as they represent the brand and can significantly influence customer perceptions. Tracking and Accountability: Keeping track of the demonstration stock to monitor usage, manage costs, and prevent losses or damage. 38

46. Key considerations for managing demonstration stock include: Regular Updates: Rotating and updating demonstration stock regularly to feature the latest products, versions, or features, keeping the demonstrations current and relevant. Customer Interaction: Using demonstration stock to engage with customers, answer their questions, and gather feedback on their experience and preferences. Cost Management: Balancing the benefits of having demonstration stock with the costs associated with it, including potential wear and tear and the need for replacements. 38

47. RETAIL BACKROOM STOCK Retail backroom stock1 is inventory located in the storage or backroom of a retail store. Retail backroom stock may actually be in- transit stock, safety stock, or cycle stock or a combination of safety stock and cycle stock. 47

48. R ETAIL BACKROOM STOCK Node C might be a cross dock or it might be a retail backroom. If inventory is ordered from Node A and from Node B, but it travels from Node B through Node C, and then on to Node A, then Nodes A and B are inventory holding nodes and Node C is not. An inventory holding node is a physical location from which orders are placed and received. 48

49. If inventory from the shelves is not replenished from the backroom, then the backroom is not an inventory holding node but simply a staging area, and, hence, the inventory is in-transit stock. If inventory is planned to be held in the backroom, the retail shelves are replenished from the backroom, and the backroom is replenished from the distribution center (DC) or supplier, the inventory in the backroom is a combination of cycle stock and safety stock 49

50. If store safety stock is set to shelf capacity, then on average, no units that arrive to the shelf from an order will fit on the shelf. Consider a continuous review (Q,ROP) system. If shelf capacity is equal to ROP + Q, then units will always fit on the shelf when an order arrives. Shelf space costs must be weighed against labor costs among other things in setting shelf capacity. 50

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52. Replenished retail shelf stock20 is inventory that is on the shelf and consists of both cycle and safety stock 52

53. Seasonal stock is inventory held for a portion of the year; it may be replenished during the season or it may not be. 53

54. Seasonal stock is usually purchased based on a single order, even if it is replenished. The news vendor model is an approach to calculating the order quantity. If not enough seasonal stock is purchased, sales and profit are lost. If too much is purchased, markdowns become necessary, reducing the ROI. The news vendor model attempts to balance these costs. 54

55. Seasonal stock refers to inventory that is specifically purchased and held to meet the expected demand during particular seasons or periods of the year. These products are typically associated with certain holidays, weather conditions, or events, and their demand fluctuates accordingly. Managing seasonal stock effectively is crucial for maximizing sales and minimizing excess inventory. Effective management of seasonal stock can enhance profitability by aligning inventory with customer demand, reducing the risk of stockouts or overstocking, and ensuring a positive customer experience during peak shopping periods. 55

56. Key considerations for managing seasonal stock include: Demand Forecasting: Accurately predicting the demand for seasonal products based on historical sales data, market trends, and other relevant factors to ensure the right amount of stock is ordered. Inventory Planning: Strategically planning the purchase and replenishment of seasonal stock to align with anticipated peaks in demand, ensuring that there is enough inventory without overstocking. Timing: Carefully timing the arrival and display of seasonal stock to coincide with the beginning of the season or promotional period. Early or late arrival can lead to missed sales opportunities or excess inventory. Promotion and Marketing: Developing targeted marketing campaigns and promotions to create awareness and drive sales of seasonal products. 56

57. Key considerations for managing seasonal stock include: Space Allocation: Allocating sufficient space on the sales floor and in storage areas to accommodate seasonal stock, including the use of temporary displays or additional shelving if needed. Clearance Strategies: Planning for the end of the season by implementing clearance strategies to sell off remaining seasonal stock, such as discounts, bundle offers, or special promotions, to avoid carrying over excess inventory. Supplier Coordination: Working closely with suppliers to ensure timely delivery of seasonal products and to manage any supply chain disruptions that could impact availability. Flexibility: Being prepared to adjust inventory levels and marketing strategies based on real-time sales data and market conditions to optimize stock levels and maximize sales. 57

58. In many retail stores, certain items are found in multiple locations. For example, candy bars are often at multiple check stands in the grocery store and also in the candy aisle. Items can potentially be out of stock at many locations and still record daily sales if they are in stock in other locations within the store. Keeping all of the locations stocked is a store execution challenge. 58

59. Many of these items are impulse items, meaning that people don’t come to the store planning on purchasing them but decide to purchase them when they see them on the shelf. This inventory may be a combination of cycle stock and safety stock for the store as a whole, but in the individual locations, the inventory can be difficult to plan and manage well. Many times the specific locations the inventory is held in changes over time, with the exception of where its continual location is in the main part of the store. 59

60. Raw material stock is inventory held for production. For example, to make bread, grain must be held. Running out of stock of raw material inventory can be expensive because it can cause the entire production line to shut down. Also, raw material inventory is relatively less expensive than finished goods inventory, so holding more of it can easily be argued. 60

61. Suppose a bread manufacturer keeps introducing new types of bread, and every time a new bread SKU is introduced, a new specification of grain is created, to the point that eventually there are 100 different grains for 100 different SKUs. If it would be possible to have 10 grains and still be able to produce the 100 different SKUs, the total amount of inventory required could be greatly reduced. 61

62. Raw material stock refers to the inventory of basic materials and components that a company holds for use in the production process. These materials are the foundation of the manufacturing process, and their management is crucial for ensuring smooth and efficient production operations. Effective management of raw material stock helps maintain consistent production schedules, reduce costs, and meet customer demand. Effective management of raw material stock is essential for maintaining production efficiency, reducing costs, and ensuring that finished products are delivered on time to meet customer demand. 62

63. Key considerations for managing raw material stock include: Inventory Levels: Determining the optimal level of raw materials to keep on hand, considering factors such as production schedules, lead times, and demand forecasts. Just-In-Time (JIT) Inventory: Implementing a JIT inventory system to reduce holding costs by receiving materials only as they are needed in the production process, thus minimizing excess inventory. Supplier Relationships: Building strong relationships with suppliers to ensure reliable and timely delivery of raw materials. This can also include negotiating favorable terms and bulk purchasing agreements. Quality Control: Ensuring that raw materials meet the required quality standards to avoid defects in the final product and reduce waste. Storage Conditions: Maintaining appropriate storage conditions to preserve the quality of raw materials, such as temperature control, humidity levels, and protection from contamination. 63

64. Key considerations for managing raw material stock include: Inventory Tracking: Using inventory management systems to track raw material stock levels, monitor usage rates, and automate reordering processes. Cost Management: Analyzing the costs associated with holding raw materials, including storage, insurance, and potential obsolescence, to optimize inventory investment. Lead Time Management: Understanding and managing the lead times for obtaining raw materials to avoid production delays and ensure continuous operations. Safety Stock: Maintaining a buffer of safety stock to protect against supply chain disruptions, unexpected demand spikes, or production delays. Waste Reduction: Implementing practices to minimize waste and efficiently use raw materials, such as recycling scraps and optimizing production processes. 64

65. Work in process stock is inventory in the process of being transformed into the finished product. WORK IN PROCESS STOCK 65

66. Key considerations for managing Work in Process stock include: Tracking and Monitoring: Using inventory management systems to track the progress of WIP items through the production process, ensuring real-time visibility and accurate records of each stage. Balancing Inventory Levels: Striking the right balance between having enough WIP to keep production flowing smoothly and minimizing excess WIP that can tie up resources and increase holding costs. Production Scheduling: Planning and scheduling production activities to ensure a steady flow of materials and work through the manufacturing process, avoiding bottlenecks and idle time. WORK IN PROCESS STOCK 66

67. Key considerations for managing Work in Process stock include: Lean Manufacturing: Implementing lean manufacturing principles to reduce waste, improve efficiency, and optimize the use of resources throughout the production process. Quality Control: Ensuring that quality checks are integrated at various stages of the production process to identify and address defects early, preventing the progression of flawed items. Capacity Planning: Assessing production capacity to ensure that the available resources (machinery, labor, etc.) can handle the workload and meet production targets without creating excessive WIP. WORK IN PROCESS STOCK 67

68. Key considerations for managing Work in Process stock include: Workflow Optimization: Streamlining workflows and processes to reduce the time items spend as WIP, moving them more quickly towards completion and reducing lead times. Bottleneck Management: Identifying and addressing bottlenecks in the production process that can cause delays and increase WIP inventory. Kanban Systems: Using Kanban systems to manage the flow of WIP and signal when new work should be started, helping to control inventory levels and improve efficiency. Data Analysis: Continuously analyzing production data to identify trends, inefficiencies, and areas for improvement in the management of WIP stock. WORK IN PROCESS STOCK 68

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70. Finished goods stock is inventory in its final form after production. FINISHED GOODS STOCK 70

71. This stock is held in warehouses or storage facilities until it is sold and shipped to customers. Effective management of finished goods stock is essential for meeting customer demand, optimizing inventory levels, and maintaining operational efficiency. Effective management of finished goods stock helps ensure that products are available to meet customer demand, reduces carrying costs, and improves overall supply chain efficiency. This contributes to higher customer satisfaction and better financial performance for the company. FINISHED GOODS STOCK 71

72. It is sometimes built up between workstations so that the entire line doesn’t have to shut down if one machine breaks down. However, when there is more stock in between workstations, the feedback loop between the workstations is longer. 72

73. Suppose two people, Lin and Jim, are at different workstations. Lin takes a block of wood and drills a hole in it. Jim places a wooden peg in the hole. The hole has to be just right. If the hole is too big, the peg passes clean through. If the hole is too small, the peg does not fit. To reduce inventory, checks must be in place to make sure the drill press is reliable. Then, Suppose that Lin’s drill press is unreliable, but he drills a lot of blocks and produces 20 days of supply 73

74. Just- in- time (JIT) came to the United States through the change in perception of Japanese products being sold here. The reputation of Japanese and Chinese goods transformed from one of low quality in terms of product failures or breakdowns in the late 1960s and early 1970s to one of high quality in the late 1970s and early 1980s. 74

75. Just-in-time (JIT) is a production strategy aimed at improving a business’s return on investment by reducing in-process inventory and associated carrying costs. It is a lean manufacturing methodology that aligns raw material orders from suppliers directly with production schedules. JIT inventory systems are designed to produce or receive goods only as they are needed in the production process, thus minimizing waste and maximizing efficiency. 75

76. Key principles and benefits of Just-in-time (JIT) include: Inventory Reduction: JIT minimizes the amount of inventory held at any given time, reducing storage costs and the risk of obsolescence. Waste Reduction: By producing only what is needed, JIT reduces waste from overproduction, excess inventory, and defects. Improved Cash Flow: Lower inventory levels mean less money is tied up in stock, improving cash flow and financial flexibility. Enhanced Efficiency: JIT encourages a streamlined production process, leading to better use of resources and time. 76

77. Key principles and benefits of Just-in-time (JIT) include: Quality Improvement: With JIT, quality control is integrated into every step of the production process, leading to higher-quality products and fewer defects. Supplier Relationships: JIT requires strong relationships with suppliers to ensure timely delivery of materials. This can lead to more reliable and responsive supply chains. Flexibility and Responsiveness: JIT systems allow companies to respond more quickly to changes in demand, as they are not burdened by large amounts of inventory. Employee Involvement: JIT often involves all employees in the production process, encouraging teamwork and a culture of continuous improvement. 77

78. Key considerations and challenges of implementing JIT include: Supply Chain Reliability: JIT relies heavily on the reliability and responsiveness of suppliers. Any disruption in the supply chain can halt production. Demand Variability: JIT works best when demand is relatively stable and predictable. High variability in demand can be challenging to manage. Lead Times: Short lead times from suppliers are crucial for JIT. Long lead times can disrupt the balance and efficiency of JIT systems. 78

79. Key considerations and challenges of implementing JIT include: Initial Setup Costs: Implementing JIT can involve significant changes to production processes and systems, which may incur initial setup costs. Risk Management: With minimal inventory on hand, companies must have robust risk management strategies to handle unexpected disruptions or delays. Training and Culture: Successful JIT implementation requires training employees and fostering a culture of continuous improvement and collaboration. 79

80. Overall, JIT can lead to significant improvements in efficiency, cost savings, and product quality when implemented effectively. However, it requires careful planning, strong supplier relationships, and a commitment to continuous improvement. 80

81. SPARE PARTS STOCK Spare parts stock is inventory of components that go into finished products Spare parts are used for maintenance and for repair. Maintenance is usually scheduled way in advance, so planning for spare parts inventory is more like planning a project. 81

82. The project is the maintenance, and the spare parts have to be there when the maintenance is going to occur. However, the need for spare parts for use in repair is not planned but in some cases can be forecast. Some laws exist that state that spare parts must be maintained for a certain number of years after a product is discontinued. 59

83. SPARE PARTS STOCK Spare parts stock refers to the inventory of components, parts, or items held by a company to support maintenance, repair, and operations (MRO) activities. These parts are critical for ensuring the continuous operation of equipment, machinery, vehicles, or facilities. Effective management of spare parts stock is essential for minimizing downtime, reducing costs associated with equipment failures, and maintaining overall operational efficiency. Effective management of spare parts stock ensures that maintenance activities are carried out efficiently, equipment downtime is minimized, and operational costs are optimized. This contributes to improved reliability, productivity, and overall organizational performance. 83

84. SPARE PARTS STOCK Key aspects of managing spare parts stock include: Inventory Classification: Categorizing spare parts based on criticality, usage frequency, lead times, and other factors to prioritize management efforts and investment. Demand Forecasting: Using historical data, maintenance schedules, and equipment reliability metrics to forecast demand for spare parts accurately. Safety Stock: Maintaining safety stock levels to buffer against unexpected increases in demand, lead time variability, or equipment failures. Supplier Relationships: Building strong relationships with suppliers to ensure timely delivery of spare parts and negotiate favorable terms, such as volume discounts or service-level agreements (SLAs). Inventory Optimization: Employing inventory management techniques, such as ABC analysis, economic order quantity (EOQ), and Just-in-Time (JIT) principles, to optimize stock levels and minimize carrying costs. 84

85. SPARE PARTS STOCK Key aspects of managing spare parts stock include: Storage and Organization: Storing spare parts in appropriate conditions to preserve their quality and usability, including climate control, proper labeling, and inventory tracking. Lifecycle Management: Monitoring the lifecycle of spare parts, including obsolescence risk and warranty periods, to proactively manage replacements and upgrades. Asset Management Systems: Implementing asset management systems or computerized maintenance management systems (CMMS) to track spare parts usage, maintenance history, and reorder points. Emergency Preparedness: Developing contingency plans and emergency response procedures to quickly access and deploy critical spare parts during unexpected equipment breakdowns or failures. Continuous Improvement: Regularly reviewing and updating spare parts management strategies based on performance metrics, feedback from maintenance teams, and changes in operational requirements. 85

86. THERE ARE TWO SALIENT CATEGORIES OF ORDERING COSTS 60 Namely, variable ordering costs and fixed ordering costs . Variable ordering costs are a cost per unit, whereas fixed ordering costs are a cost per order.

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88. Inventory 88 Maintaining inventory incurs costs such as storage, handling, insurance, and potential obsolescence. However, not having enough inventory can lead to lost sales opportunities, production delays, customer dissatisfaction, and in some cases, increased costs to expedite or rush order replacements. Striking the right balance between having enough inventory to meet demand and minimizing carrying costs is a continual challenge for businesses. It often requires careful planning, effective supply chain management, and responsiveness to changes in customer demand and market conditions.

89. Inventory 89 Costs of Having Inventory: Carrying Costs: Expenses related to storing inventory, including rent, utilities, insurance, and depreciation of storage facilities. Opportunity Costs: Capital tied up in inventory could be used for other investments or operational needs. Obsolescence: Inventory that becomes outdated or expires, leading to write-offs and losses. Handling and Management: Costs associated with handling, counting, tracking, and managing inventory.

90. Inventory 90 Costs of Not Having Inventory: Stockouts : Lost sales due to unfulfilled customer demand, potentially damaging customer relationships and brand reputation. Rush Orders : Higher costs to expedite orders from suppliers to meet immediate demand. Production Delays : Disruptions in manufacturing or operations due to lack of necessary parts or materials. Impact on Efficiency : Reduced productivity and efficiency as operations halt or slow down waiting for inventory.

91. Inventory 91 Finding the Balance: Demand Forecasting : Accurate forecasting helps minimize excess inventory while ensuring enough stock to meet demand. Lean Principles : Implementing lean manufacturing or inventory management techniques (like JIT) to reduce waste and optimize inventory levels. Safety Stock : Maintaining a buffer of safety stock to mitigate the risks of stockouts due to demand variability or supply chain disruptions. Technology and Automation : Using inventory management systems to track and optimize inventory levels in real-time, improving efficiency and reducing costs.

92. Secret Life of Inventory | What is Inventory Management?

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94. REFERENCES 62