Download presentation
Presentation is loading. Please wait.
Published byBrett Knight Modified over 9 years ago
2
Various inventory costs How decisions depend on inventory costs Inventory practices Inventory carrying costs Management tactics for inventory Technology dependent strategies Relationships dependent strategies
3
Four major types of inventory costs Inventory carrying costs o Capital cost o Cost of storage space o Service cost of inventory o Risk cost of inventory Order/setup cost Expected stockout cost In-transit inventory carrying cost
4
Higher inventory investment = greater customer service and support Trade off between cost and service ◦ Economic order quantity model ◦ Finding new logistics solutions Just in time Better customer service Lesser investment in inventory
5
Reduction in the buffer stock Avoid contract penalty clauses Reduces inventory cost Decrement in raw material level Increase customer ordering responsibility Steady order schedule Reduces inventory cost Manages logistics requirements
6
Riordan would have to bear all the expenses pertaining to inventory The profit is reduced due to the inventory costs Backorders and unmatched demands arise from reduced inventory level. Higher cost, space constraints and inventory risk cost result from having higher inventory
7
Distribution Requirements Planning – DRP Materials Requirements Planning – MRP Just in Time – JIT Riordan must implement JIT
8
ERP solution ◦ MRP ◦ Globalize software Results ◦ Increase in efficiency ◦ Paperless ◦ Decrease in inventory level
9
Forging alliances with important suppliers Exercising control to reduce risk Pull/Push strategy JIT
10
Various inventory costs Find a trade off between cost and service Decrease buffer stock and raw materials Rising inventory cost Recommendation for JIT Develop ERP system Work towards establishing better relationship with suppliers
11
Accounting for Management website. (2011). Economic order quantity (EOQ). Retrieved from http://www.accountingformanagement.com/economic_order_quantit y_eco.htm Coyle, J. J., Langley, C. J., Gibson, B. J., Novak, R. A., & Bardi, E. J. (2008). Supply chain management: A logistics perspective (8th Ed.). Mason, OH: Cengage. Engel, B. (2011). 10 Best practices you should be doing now. Retrieved from http://www.supplychainquarterly.com/topics/Procurement/scq2011 01bestpractices/
12
Riordan Manufacturing intranet (2006). Operations: Supply chain. Retrieved from https://ecampus.phoenix.edu/secure/aapd/cist/VOP/Business/Rior dan/Ops/RioOps005.htm
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.