Inventory Management

BA501 : The Class : POM : Inventory
Inventory Management

Inventory can serve several function that add flexibility to a firm's operations. The six functions of inventory are:

1. To provide a stock of goods to meet anticipated customer demand an provide a "selection" of goods.
2. To de-couple suppliers from production and production from distribution.
3. To take advantage of quantity discounts, because purchases in larger quantities may reduce the cost of goods or delivery.
4. To hedge against inflation and upward price changes.
5. To permit operations to continue smoothly with the use of "work-in-process" inventory (goods that have been moved partway through production).

Given that inventory accomplishes the functions presented above, carrying inventory comes at a cost. This lesson will present methods and techniques that will minimize this cost whenever inventory has to be carried.

Objectives:

The objectives for this lesson are as follows:

1. List the different types of inventory.
2. Categorize inventory using ABC analysis.
3. Define independent demand, dependent demand, holding costs, ordering costs, and setup costs.
4. Calculate the basic economic order quantity.
5. Calculate the reorder point for the basic inventory model.
6. Calculate the production order quantity.
7. Calculate the order quantity for quantity discounts.

Thought for Today

Use Virtual Conference Center to post questions to help each other solve problems and do assignments. Click on the Communications button above for instructions on your username and password. See the

class calendar for announcements and assignments.

To complete this Topic successfully, please complete the following activities in the order shown below:

Text TEXTBOOK READING : Chapter 12 Heizer and Render

ON-LINE LESSON: Inventory Management: Introduction and Examples

ASSIGNMENT: Home Work

Look here before beginning quiz if using a telephone modem.

SELF TEST: Practice Quiz

The following site contains general articles related to inventory management. Explore the site.

WEB ACTIVITY: Center for Inventory Management

Use WebMail to send attachments and/or messages. Put BA501 (last name) Assignment name and number somewhere in the "subject" line of your e-mail. Address to BA501@mail.cba.nau.edu

WEBMAIL: WebMail

Login using the spaces to give your e-mail address (DANA account only) and password. Take the both multiple choice exams associated with each chapter. E-mail the results to yourself (but not me). These exams are found on the web site for the textbook under "Study Guide" for each chapter. Click here to continue.

Once you have completed these activities you should:

Go on to Just in Time
or
Go back to Production Operation Management

Please reference "BA501 (your last name) Assignment name and number" in the subject line of either below.

E-mail Dr. Rakesh Pangasa at BA501@mail.cba.nau.edu
or call (928) 344-7588. Use WebMail for attachments.