Understand the power of safety stock and how to calculate it.
How do you know when there is enough inventory to meet demand? When is the right time to buy? How much should be purchased? Holding too much inventory consumes cash, space and may lead to shrinkage and obsolescence, while holding too little leads to back orders, production delays, expedited shipping and unhappy customers. In this topic we will explore inventory and purchasing concepts, how to use data to glean insight about your products and how to establish a systematic approach to purchasing.
Inventory - Review
ï Classifications and States (Raw, Wip, Finished)
ï Valuation Methods (FIFO, Average, Actual)
ï Effects on Balance Sheet and Income Statement
Inventory Usage Patterns
ï Continuous vs. Spot
ï New and Discontinued SKUs
ï Order Fulfillment History
ï Orders Never Entered
The Trade-off: Inventory on Hand vs. Service Level
ï How to Keep Service Levels High Without Increasing Inventory
A Systematic Approach Using Reorder Points
ï Reorder Point = Lead Time Demand + Safety Stock
ï What Is Lead Time?
ï Order Interval and How Does It Affect Lead Time?
ï Determining Demand
ï Demand Variation and How It Affects Service Level
ï How Does Service Level Affect Safety Stock?
ï Maximum or Order up to Quantity
ï Order Quantity
Ian Benoliel with NumberCruncher.com, Inc.
AIPB ,APICS ,CPE ,ISM ,Additional credit may be available upon request.