Instructor:

Cecil Bozarth , PhD
North Carolina State University
Author of "Introduction to Operations and Supply Chain Management," 2nd edition, Pearson, Prentice-Hall

SECTION Index

Introduction

Functions and Drivers of Inventory

Independent vs. Dependent Demand Inventory Systems

Two Classic Independent Demand Systems

   1. Periodic Review System

   2. Perpetual System

EOQ, Reorder Point, and Safety Stock Analysis

   1. EOQ Model

   2. Safety Stock Analysis

   3. Reorder Point Formula

Summary

References

Related
SITE LINKS

Inventory Positioning in the Distribution Channel

Inventory Management Models : A Tutorial

FUNCTIONS AND DRIVERS OF INVENTORY

Inventory serves a useful purpose in the supply chain.  That said, firms can help minimize the need for inventory by carefully managing those factors that drive inventory levels up.

Functions of Inventory

Four Inventory Drivers

Functions of Inventory

• Transit stock / pipeline inventory

• Cycle stock

• Safety stock (buffer inventory)

• Anticipation inventory

• Others
• Smoothing inventories
• Hedge inventories

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Four Inventory Drivers

• Demand / Capacity Mismatches
• Smoothing inventories                                                                         

• Demand / Process Volume Mismatches
• Cycle stocks

• Demand  / Supply Uncertainty
• Safety stocks                    

• Demand  / Supply chain lead time mismatches
• Anticipation inventories

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