2. OMSAN LOJİSTİK

3. Fundamentals and Terminology of Inventory Planning and Management Inventory Planning and Management Latin America Logistics Center Logistics Management Series -

4. Introduction Inventory, Logistics, and Business Best Practices in Inventory Planning and Management Fundamentals of Inventory Planning and Management

5. Logistics and Inventory Customer Service Inventory SupplyTransportation Warehousing

6. Logistics Master Plan Customer Service

7. Inventory Master Plan Fill Rate Forecasting EOQ Replenishment Positioning Inventory

8. Inventory Management Dilemmas What should it be the Fill Rate? What is the optimum Inventory Turnover?

9. Inventory Management Dilemmas The highest Fill Rate that satisfies ROA ? The level of Fill Rate that Customer want? The optimum between inventory carrying costs and cost of lost sales? The right combination between optimums and industry benckmarks?

10. Inventory Management Performance Gaps

11. Inventory Management Inventory is an ASSET to: * Hide Forecasting errors * Hide Planning errors * Hide Registry errors * Hide Quality faults * Allow optimum production batches * Keep high customer service

12. The Value Chain

13. Key Questions * WHEN TO ORDER? * HOW MUCH EACH ORDER? * HOW OFTEN WE WANT TO EVALUATE??

14. Inventory Costs HOLDING COST * Opportunity Costs Cash Flow Risk * Handling * Insurance * Obsolescence * Damages, Theft, Merma * Taxes BACKORDER COSTS * Lost Sales * Customer Ill Will * Information Costs * Expediting * Loss of Production SETUPCOSTS * Cost to place an order * Machine Setup * Sampling Cost

15. Basic Trade-Offs COST Order or Setup Holding Backorders Inventory Level HighLow

16. Controls InventoryControlPolicy Fill Rate EOQ Demand Forecasting Inventory Planning Algorithms

17. Inventories in the American Economy Logistics Costs Definition

18. Inventories in the American Economy Logistics Costs USA vs. GNP 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 196019651970 1975197919801981198219831984198519861987198819891990199119921993199419951996 %Inventory Carrying Cost vs. GNP %Transportation Cost vs. GNP %Physical Distribution vs. GNP 199719981999 200020012002 2003

19. Inventories in the American Economy Transportation vs. Inventories 1994199519961997199819992000200120022003 Inventory Carrying Cost vs. Total Physical Distribution Cost Transportation Cost vs. Total Physical Distribution Cost

20. Inventories in the American Economy Replacing Inventory by Transportation Transportation to Inventory Carrying Cost Ratio 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 196019651970 19751979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003 Transportation to Inventory Carrying Cost Ratio

21. Notation Push vs. Pull Types of Orders Types of Inventories Levels of Inventories Backorders Parameters Planning Financial Notation Demand Notation Decision-making Variables

22. Push vs. Pull Push Sell what has been produced. Keeping the plant operating is Critical: cigarettes, dog food, chocolates, electric appliances... Pull Produce what has been sold.

23. Types of Orders Customer Orders Purchase Orders Back Orders Re-Ordering

24. Types of Inventory Service Inventory In-Transit Inventory Safety Stock Contingency Inventory Efficient Process Inventory Efficient Purchasing Inventory

25. Types of Inventories Inventory Role Stabilization Inventory Anticipation Inventory Reserve Inventory In-Consignment Inventory

26. Types of Inventories Inventory Status Raw Materials Inventory Parts Inventory Work in Process (WIP) Finished Goods Inventory In-Transit Inventory Backorders

27. Types of Inventory - Roles

28. Inventory Levels On-hand stock (On-Hand) (OHS) = number of units available in shelfs Net Stock = OHS - BO On-hand stock less backorders Inventory Position = On-hand stock + ordered units + in-transit units - backorders

29. Stock-outs

30. Backorders vs. Lost Sales Backordering Any order not delivered but not lost. Common in low competitive markets Lost Sales Non-attended sales for not having stock on-hand Substitution Replacement of a product in stock-out with another

31. Lost Sales Product Type Demand Characterisitics Substitutes Costs of stock-outs Competitiveness of the Market Subjective but Quantifiable

32. Inventory Planning Parameters SP = Sales Price UIV = Unit Inventory Value ICR = Inventory Carrying Rate POC = Purchasing Order Costs SUC = Set-Up Costs SF = Scarcity Factor

33. Inventory Carrying Rate Handling & Warehousing 22% Opportunity 22% Taxes, Obsolescence, Insurance Damages 56%

34. Purchase Order Cost (POC) Communications Administration Financial Costs of the Payment Strategy Information Systems Staff Equipment Office Supplies Banking Costs Documentation, Customs, etc.

35. Set-Up Cost (SUC) Changes of SKU in the Production Program Labour Waiting Time Cleaning - Decontamination Waste Damages in Test Batches

36. Financial Notation AIV = Average Inventory Value ICR = Inventory Carrying Rate ICC = Inventory Carrying Cost LSC = Lost Sales Cost TPC = Total Policy Cost TIC = Total Inventory Cost

37. Nivel de Inventario Promedio (Average Inventory Levels) Average Inventory Level (AIL) Number or repositions The Average Inventory Level exponentially decreases with reference to the number of repositions AIL(I) = Σ (Inventory Level) Number of Observations AIV = Σ i {AIL(I)*UIV(I)} ICC = AIV * ICR

38. Inventory Levels On-Hand Inventory (OHS) Net Stock (NS) NS = OHS - BO Net Inventory Position (NIP) NIP = OHS + On-Order - BO - CI Safety Stock (SS)

39. Lost Sales Cost LSC = AD * (1-UFR) * USP * SF AD = Annual Demand UFR = Unit Fill Rate USP = Unit Sales Price SF = Scarcity Factor

40. Demand Notation L = Lead Time AD = Annual Demand LD = Lead Time Demand FAD = Forecasting Annual Demand FLD = Forecasting Lead Time Delivery SDFLD = Standard Deviation of Forecasting Lead Time Delivery

41. Safety Stock (SS)

42. Re-Order Point

43. What Fill Rate?

44. Demand Probability

45. Replenishment Quantity

46. Lead Time (LT)

47. Demand in Lead Time (LTD)

48. Variance in the Lead Time Short Delivery times is Good. Consistent Delivery times is Better!

49. Decisions... What is the Optimum Fill Rate? What will be the Demand? When do I have to Order? How much do I have to Order? How much of Safety Stock? How much of Service Stock? How often do I have to check my Inventory Policy? Where do I have to locate my inventory within the network?

50. Inventory Master Plan