1. Inventory Management 1Dr.BALAMURUGAN MUTHURAMAN Chapter 1

2. Chapter Outcomes  Meaning of Inventory  Function of Inventory  Types of Inventory  Inventory Cycle  Benefits of Inventory  Inventory supply chain  Determining of Inventories quantities 2Dr.BALAMURUGAN MUTHURAMAN

3. INVENTORY Inventories include goods purchased and held for resale, for example, merchandise purchased by a retailer and held for resale, computer software held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the enterprise and include materials, maintenance supplies, consumables and loose tools awaiting use in the production process. 3Dr.BALAMURUGAN MUTHURAMAN

4. INVENTORY  Items held for resale in the normal course of business. That is called inventory.  Effective inventory management plays a crucial role in the smooth and efficient running of any organization.  Reducing excess inventory and investing in the right inventories leads to better customer service.  Better inventory turnover leads to healthy and successful of business. 4Dr.BALAMURUGAN MUTHURAMAN

5. Functions of Inventory  To separate various parts of the production process  To separate the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers  To take advantage of quantity discounts  To be cautious against inflation 5Dr.BALAMURUGAN MUTHURAMAN

6. Types of Inventory  Raw material  Purchased but not processed  Work-in-process  Undergone some change but not completed  A function of cycle time for a product  Maintenance/repair/operating  Necessary to keep machinery and processes productive  Finished goods  Completed product awaiting shipment 6Dr.BALAMURUGAN MUTHURAMAN

7. Raw MaterialsWork in ProgressFinished Goods Merchandising Company Manufacturing Company One Classification:  Inventory Three Classifications:  Raw Materials  Work in Process  Finished Goods 7Dr.BALAMURUGAN MUTHURAMAN

8. Care of Inventory is Necessary?  Growth of Sales: right inventory at the right place at the right time  Reduction of Cost: less money tied up in inventory, inventory management, when an object, service, or practice is no longer wanted even though it may still be in good working order. Higher Profit 8Dr.BALAMURUGAN MUTHURAMAN

9. Benefits of Inventory  To improves the accuracy of inventory orders: It helps to find out exactly how much inventory need to have on-hand. This will help prevent product shortages and allow to keep just enough inventory without having too much in the warehouse.  Inventory leads to a more organized warehouse: If the warehouse is not organized, it will have a hard time managing the inventory. Many companies choose to make the best their warehouses by putting the highest selling products together and in easily accessible places in the warehouse. This helps speed up the order fulfillment process and keeps customers happy.  It helps save time and money: By keeping track of which products have on-hand or ordered, it effort of having to do an inventory recount to ensure the records are accurate. A good inventory strategy also helps to save money that could otherwise be wasted on slow-moving products. 9Dr.BALAMURUGAN MUTHURAMAN

10.  To increases efficiency and productivity: Inventory management devices, such as barcode scanners and inventory management software, can help considerably improve the efficiency and productivity. These devices will help eliminate manual processes so employees can focus on other – more important – areas of the business.  To meet against uncertain demand: It’s a fact that good inventory management leads to what are goods are continuously buying for – repeat customers. If able to meet customer demand quickly the inventory helps to meet this demand by allowing to have the right products on-hand as soon as to customers need. 10Dr.BALAMURUGAN MUTHURAMAN