1. Operations & Logistics Management
Lesson 11- Inventory Planning & Control

2. INVENTORY
Stored accumulation of material resources in a transformation system.
Purpose of buffer inventory is to provide the operation the ability to continue production regardless of external changes.

3. INVENTORY 5 types of inventory are identified: Buffer Inventory
Cycle Inventory-created when more than one product
3. De-coupling Inventory
4. Anticipation Inventory
5. Pipeline Inventory

4. DISADVANTAGES IN KEEPING INVENTORY
Working capital is needed to buy inventory
Keeping inventory costs money. Associated costs include:
Adequate storage facilities must be provided
Security to ensure that inventory is not stolen
Inventory management system to keep track of inventory holdings
Insurance against damage, theft and fire
Special storage requirements may be needed
Administrative and control cost in the management and handling of inventory.

5. DISADVANTAGES IN KEEPING INVENTORY
Inventory may become obsolete as alternative and product improvements occur. This is especially important for technology-based goods.
Storage of inventory has the risk of being damaged.
Inventory control is critical since ineffective control could lead to losses or expensive to retrieve.
Inventory may increase general safety risks due to hazardous characteristics.
The space that is allocated to inventory may provide a higher value add.

6. WAYS TO LIMIT POTENTIAL DISADVANTAGES OF EXTENDED INVENTORY HOLDING
Inventory Cost
Inventory Profile
Economic Order Quantity (EOQ) formula and Economic Batch Quantify model (EBQ)
When to Reorder

7. IMPORTANT
Inventory requires active and constant control and monitoring. In operations where large stock holdings are required losses due to ineffective inventory control and monitoring could result in devastating losses.
Inventory control is not a complex function but will always be a tedious and painful one which requires a dedication to re-enforce control measures on a daily basis and is dependent on a willingness to check and check again.

8. QUESTIONS What is inventory?
What are the advantages and disadvantages of holding inventory?
How can inventory be controlled?