Inventory Fundamentals: Operations and Supply Chain Management

This lecture is taken from MBA 540, an introductory course in operations and supply chain management taught through the Poole College of Management Online MBA program. The material is provided courtesy of the instructor

Inventory is an important resource in supply chains, serving many functions and taking many forms. But like any resource, it must be managed well if an organization is to remain competitive. In this section, we examine the various types of inventory found in a simple supply chain. In addition, we introduce some basic tools for managing independent demand inventory. These tools provide managers with simple models for determining how much to order and when to order.

Learning Objectives

Upon completion of this unit, you should be able to:

  • Describe the various roles of inventory, including the different types of inventory and inventory drivers.
  • Distinguish between independent demand and dependent demand inventory.
  • Calculate the restocking level for a periodic review system.
  • Calculate the economic order quantity (EOQ) and reorder point (ROP) for a continuous review system.
  • Determine the best order quantity when volume discounts are available.

Inventory Fundamentals: Operations and Supply Chain Management, Cecil Bozarth, Ph.D.