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Logistics and Supply Chain Management Neha Tikoo, Lovely Professional University

Notes Unit 7: Inventory Management

CONTENTS
Objectives
Introduction

7.1 Functionality and Definitions
7.1.1 Geographical Specialization
7.1.2 Decoupling

7.1.3 Balancing Supply and Demand
7.1.4 Buffer Uncertainties
7.2 Inventory Costs
7.2.1 Average Inventory
7.2.2 Holding (or Carrying) Costs

7.2.3 Ordering Costs
7.2.4 Setup (or Production Change) Costs
7.2.5 Shortage or Stock-out Costs
7.3 Planning Inventory

7.3.1 Determining Order Point (When to Order?)
7.3.2 Determining Lot Size (How Much?)
7.3.3 Discrete Lot Sizing
7.4 Managing Uncertainty
7.5 Inventory Management Policies

7.5.1 Inventory Control
7.5.2 Reactive Methods
7.5.3 Planning Methods

7.5.4 Collaborative Inventory Planning
7.5.5 Adaptive Logic
7.6 Inventory Management Practices
7.6.1 Product/Market Classification
7.6.2 Segment Strategy Definition

7.6.3 Operationalise Policies and Parameters
7.7 Summary
7.8 Keywords
7.9 Review Questions

7.10 Further Readings

144 LOVELY PROFESSIONAL UNIVERSITY