Header Navigation:

Supply Chain Management, SCM, SCRC Supply Chain Resource Cooperative, Poole College of Management, North Carolina State University

Tackling real-world supply chain management challenges by applying research, experience and knowledge.

SCRC Article Library: FUNCTIONS AND DRIVERS OF INVENTORY: Inventory Management Models : A Tutorial

FUNCTIONS AND DRIVERS OF INVENTORY: Inventory Management Models : A Tutorial

Published on: Jan, 28, 2011

by: Cecil Bozarth, PhD

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

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

Related Articles

Supply Chain Resource Cooperative Poole College of Management NC State University 2806-A Hillsborough Street Raleigh, NC 27695-7229