1. 4 Inventory

2. What does inventory mean?
4.1 Inventory concepts
What does inventory mean?
Inventory or stock refers to the goods and materials that a business holds for the ultimate purpose of resale (or repair). Inventory management is a science primarily about specifying the shape and placement of stocked goods.

3. 4.1 Inventory concepts Why to hold inventories
Formulation of an inventory policy requires an understanding of the role of inventory in manufacturing and marketing. Inventory serves five purposes within the firm:
(1) it enables the firm to achieve economies of scale;
(2) it balances supply and demand;
(3) it enables specialization in manufacturing;
(4) it provides protection from uncertainties in demand and order cycle;
(5) it acts as a buffer between critical interfaces within the channel of distribution.

4. Types of Inventory Inventories can be categorize
into the following types:
(1) Cycle stock,
(2) In-transit inventories,
(3) Safety or buffer stock,
(4) Speculative stock,
(5) Seasonal stock,
(6) Dead stock.

5. 2.3.3 Inventory concepts Types of Inventory (1) Cycle stock
Cycle stock is inventory that results from the replenishment process and is required in order to meet demand under conditions of certainty that is, when the firm can predict demand and replenishment times (lead times) perfectly.
The average cycle stock is equal to half of the order quantity.
(2) In-Transit Inventories
In-transit inventories are items that are in route from one location to another. They may be considered part of cycle stock even though they are not available for sale and/or shipment until after they arrive at the destination.
Should be considered as inventory at the place of shipment origin when calculating the inventory carrying cost

6. 4.3 Inventory concepts Types of Inventory (3) Safety or buffer stock
Safety or buffer stock is held in excess of cycle stock because of uncertainty in demand or lead time. The notion is that a portion of average inventory should be devoted to cover short-range variations in demand and lead time.
Average inventory at a stock-keeping location that experiences demand and/or lead time variability, is equal to half the order quantity plus the safety stock.

7. 4.3 Inventory concepts Types of Inventory (4) Speculative Stock
Speculative stock is inventory held for reasons other than satisfying current demand
(5) Seasonal Stock
Seasonal stock is a form of speculative stock that involves the accumulation of inventory before a season begins in order to maintain a stable labor force and stable production runs.
(5) Dead Stock
Dead stock is the set of items for which no demand has been registered for some specified period of time.

8. What is inventory? How to proceed inventory management?
Inventory is a major use of capital and, for this reason, the objectives of inventory management are :
to increase corporate profitability,
to predict the impact of corporate policies on inventory levels, and
to minimize the total cost of logistics activities.

9. 4.4 Inventory Control
Inventory Control is the supervision of supply, storage and accessibility of items in order to ensure an adequate supply without excessive oversupply.
Simply, inventory Control is the process of managing an inventory so that the business derives the most overall benefit from the existence of the inventory.

10. 4.4 Inventory Control
Inventory control methods: ※

11. 4.4 Inventory management
Inventory Management under Conditions of Certainty
The best ordering policy can be determined by minimizing the total of inventory carrying costs and ordering costs using the economic order quantity model.

12. Economic Order Quantity (EOQ, 经济订货批量)
—A inventory Control method under conditions of certainty
Definition （定义）
The economic order quantity (EOQ) is the order quantity that minimizes total holding and ordering costs for the year.
Holding cost（库存维持费用） is cost of carrying inventory.
Ordering cost （订货费用） is the cost of processing of purchase orders.

13. Core Words and Expressions
agent
n. 代理人
off-road transport
路下运输
broker
运输中间人
pipeline transport
管道运输
carrier
n. 承运人
piggyback
n. 驮背运输
cable transport
索道运输
place utility
地点效用
containerization
集装箱
shipper
n. 发货人
container-on-flatcar
集装箱平板车运输
time utility
时间效用
Intermodal
adj. 联合运输的
trailer-on-flatcar
拖车平板车运输
check
v. 核查
raw material
原材料
finished goods
制成品
storage
n. 存储
mechanization
n. 机械化
time-in-transit
n. 在途时间
monitor
v. 监测
throughput
n. 生产量
packing
n. 包装
warehousing
n. 仓储
attain
v. 获得，达到
lead time
订货提前期
buffer
n. 缓冲器
marking
n. 标识
cycle stock
周期库存
order picking 拣选
carrying cost
库存持有成本
ordering cost
订货成本
dead stock
滞销库存
purchase
v. 购买
Economic Order Quantity (EOQ)
经济订货批量
procurement
v. 采购
fill rate
订单满足率
purchasing cost
购买成本
holding cost
库存维护成本
speculative stock
预备库存
in-transit inventory
在途库存
safety stock
安全库存