1. Inventory Stock of items held to meet future demand
Inventory management answers two questions
How much to order
When to order

2. Reasons To Hold Inventory
Meet unexpected demand
Smooth seasonal or cyclical demand
Meet variations in customer demand
Protect supply chain against uncontrollable external factors
Take advantage of price or quantity discounts
Hedge against price increases

3. Approaches to Inventory Management
Just-in-case inventory (overstocking)
Carry high inventories to ensure high customer service level (expensive!)
Just-in-time inventory (understocking)
Carry minimal inventory levels to control costs in exchange for risk of more stockouts

4. Inventory Costs Carrying Cost Ordering Cost Shortage Cost
cost of holding an item in inventory
Examples include warehousing, handling, pilferage, spoilage and investment costs
Ordering Cost
cost of replenishing inventory
Shortage Cost
temporary or permanent loss of sales when demand cannot be met

5. Dependent versus Independent Demand
Item
Materials With
Independent Demand
Dependent Demand
Demand
Source
Company Customers
Parent Items
Material
Type
Finished Goods
WIP & Raw Materials
Method of
Estimating
Forecast & Booked
Customer Orders
Calculated
Planning
Method
EOQ & ROP
MRP
We start this chapter by linking Dependent Demand Inventory back to Independent Demand Inventory. You might note to students that independent demand is created external to the company, dependent demand, internally.

6. Push/Pull View of Supply Chains
Procurement,
Customer Order
Manufacturing and
Cycle
Replenishment cycles
PUSH PROCESSES
PULL PROCESSES
In this view processes are divided based on their timing relative to the timing of a customer order. Define push and pull processes.
They key difference is the uncertainty during the two phases.
Give examples at Amazon and Borders to illustrate the two views
Customer
Order Arrives