inventory management

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Information about inventory management
Education

Published on August 5, 2009

Author: whayne

Source: authorstream.com

Inventory Management Explained A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems. : Inventory Management Explained A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems. Inventory Management isn't easy. If it were, more companies would be good at it. But being competent at managing your inventory isn't all that difficult either. It just requires that you invest the time to develop an understanding of the factors that should be affecting your inventory management decisions. Then use this understanding to start to put together the calculations and decision logic youwill use to manage your inventory. : Inventory Management isn't easy. If it were, more companies would be good at it. But being competent at managing your inventory isn't all that difficult either. It just requires that you invest the time to develop an understanding of the factors that should be affecting your inventory management decisions. Then use this understanding to start to put together the calculations and decision logic youwill use to manage your inventory. Explained. Calculations for forecasting, lot sizing, and safety stock are well known to the inventory management community, but are generally not understood to the level necessary to effectively use them. This lack of understanding results in incomplete calculations, incorrect inputs, flawed logic, or a fall-back to less effective, keep-it-simple approaches. : Explained. Calculations for forecasting, lot sizing, and safety stock are well known to the inventory management community, but are generally not understood to the level necessary to effectively use them. This lack of understanding results in incomplete calculations, incorrect inputs, flawed logic, or a fall-back to less effective, keep-it-simple approaches. Inventory Management Explained helps readers build a solid understanding of the key planning aspects of inventory management. It does this by clearly explaining what inventory management is, but then goes well beyond typical inventory management books by tearing apart the calculations and logic we use in inventory management and exposing the hidden (or not so hidden) flaws and limitations. It then builds on this by showing readers how they can use their understanding of inventory management and their specific business needs to modify these calculations or develop their own calculations to more effectively manage their inventory. The emphasis on practical solutions means readers can actually use what they've learned. : Inventory Management Explained helps readers build a solid understanding of the key planning aspects of inventory management. It does this by clearly explaining what inventory management is, but then goes well beyond typical inventory management books by tearing apart the calculations and logic we use in inventory management and exposing the hidden (or not so hidden) flaws and limitations. It then builds on this by showing readers how they can use their understanding of inventory management and their specific business needs to modify these calculations or develop their own calculations to more effectively manage their inventory. The emphasis on practical solutions means readers can actually use what they've learned. For those new to inventory management, the author includes highly detailed explanations and numerous examples. Instead of archaic mathematical syntax, the author explains the calculations in plain English and uses Excel formulas and spreadsheet examples for many of them. : For those new to inventory management, the author includes highly detailed explanations and numerous examples. Instead of archaic mathematical syntax, the author explains the calculations in plain English and uses Excel formulas and spreadsheet examples for many of them. For the experienced practitioner, the author provides insights and a level of detail they likely have not previously experienced. Overall, Inventory Management Explained does actually explain inventory management, and in doing so, exposes the good, the bad, and the ugly aspects of it. But more importantly, it leaves the readers knowing enough to be able to start making smart decisions about how they manage their inventory. : For the experienced practitioner, the author provides insights and a level of detail they likely have not previously experienced. Overall, Inventory Management Explained does actually explain inventory management, and in doing so, exposes the good, the bad, and the ugly aspects of it. But more importantly, it leaves the readers knowing enough to be able to start making smart decisions about how they manage their inventory. forecasting : forecasting It all starts with the forecast. Forecasting is all about turning unknowns into known (or reasonable approximations). The more unknowns you can make known, the easier it is to make inventory management decisions. But more importantly, as you increase your accuracy at estimating future demand, you are able to increase the performance of your inventory. In other words, you are able to increase your service levels while at the same time reducing your inventory investment and risk of obsolescence. Safety stocks : Safety stocks Like forecasting, effectively calculating your safety stock requirements can result in getting greater performance out of less inventory. Unfortunately, most businesses do a lousy job of calculating safety stock. Safety stock is used primarily to compensate for demand variability that cannot otherwise be calculated as part of your forecast. This seemingly random variability is called noise, and while we can't predict with certainty exactly when it will happen, we can estimate how frequently certain levels of variability will occur. We can do this through the use of statistical tools. We can then use this information to plan safety stock levels that will meet our fill-rate requirements while minimizing our inventory investment. Lot sizing : Lot sizing Calculating effective order quantities (also known as lot sizing) is really not all that difficult. Yet Economic Order Quantity (EOQ) and related cost-based lot sizing methods seem to be a complete mystery to many businesses. Sure, most people working in inventory management have heard of EOQ, but do they really understand it? The truth is, you will find that EOQ is a very logical and actually rather simple calculation. Once you understand the inner workings of cost-based lot sizing, you can use that knowledge to put together your own system that meets your specific business needs. Ordering or replenishment : Ordering or replenishment Ordering systems are the "mechanical" part of inventory management. They're the programs that take our forecasts, actual orders, safety stock, and, and order quantities, and turn them into purchase orders or production orders. Due to their mechanical nature, there's not a lot of theory when it comes to ordering systems. But that doesn't mean there aren't things you need to know.

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