1. Best Practice in Inventory Management
Customer Service
Chapter 2
Dr Tony Wild Best Practice in Inventory Management

2. Figure 2.1 Availability & Inventory
Stock Availability c
For each item
Cost of Inventory
100% 0%
Dr Tony Wild Best Practice in Inventory Management

3. Figure 2.2 Alternative Measurements of Availability
Part No.
Demand
Shortage
Service
No. of
Level (%)
Orders
A12
1000 10
99.0% 5 1
80%
B25
50.0% 0%
Average
74.5%
40%
Sum
1010 15
98.5% 6 2
66.70%
Dr Tony Wild Best Practice in Inventory Management

4. Figure 2.3 On Time Or In Full?
Current Performance
On Time
In Full
100%
What do typical Customers need?
Dr Tony Wild Best Practice in Inventory Management

5. Figure 2.4 Comparison of Despatches for Companies A & B
Analysis of supply
Company A
Company B
Delivered on time 10 30
1 week late 60 15
1 month late 20 40
3 months late
Total despatches
100
Dr Tony Wild Best Practice in Inventory Management

6. Figure 2.5 Despatch Performance for Companies A & B
Dr Tony Wild Best Practice in Inventory Management

7. Figure 2.6 Distribution of Arrears
Time Overdue
No. of Items
Weighted Average
T (weeks)
(N items)
(T x N) 1 8 2 6 12 3 4 5
Total 21 45
Dr Tony Wild Best Practice in Inventory Management

8. Figure 2.7 Managing Arrears
Weighted Average (T x N),
No. of Items (N items)
Dr Tony Wild Best Practice in Inventory Management

9. Figure 2.8 Customer Order Process
B. Order processing with
inaccurate stock records
Issue picking list
Pick and confirm availability
Create despatch note
Check Credit Worthiness
Customer order receipt
Identify Shortages
Inform customer
Part ship with despatch note
Alter stock record and record arrears
Resubmit order awaiting stock
Expedite Supply
A Order processing with
accurate stock records
Issue pick/
despatch notes
Send despatch note with goods
Occasional Discrepancy
Pick & despatch with note
Dr Tony Wild Best Practice in Inventory Management

10. Figure 2.9 Consuming the Forecast
Time (in days or weeks)
New orders
received
sales orders
Current
Order
Book
Maximum
Limit
Sales Orders
Forecast
expected =
Dr Tony Wild Best Practice in Inventory Management