Presentation is loading. Please wait.

Presentation is loading. Please wait.

 Various inventory costs  How decisions depend on inventory costs  Inventory practices  Inventory carrying costs  Management tactics for inventory.

Similar presentations


Presentation on theme: " Various inventory costs  How decisions depend on inventory costs  Inventory practices  Inventory carrying costs  Management tactics for inventory."— Presentation transcript:

1

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


Download ppt " Various inventory costs  How decisions depend on inventory costs  Inventory practices  Inventory carrying costs  Management tactics for inventory."

Similar presentations


Ads by Google