Chapter 16 "Inventory systems for independent demand", after studying this chapter you will be able to: Introduce the different types of inventories that exist in a company and provide a rationale for why companies maintain inventories, identify the various costs associated with carrying and maintaining inventories, define the classical inventory models and the conditions necessary for them to be applicable,. | F O U R T H E D I T I O N Inventory Systems for Independent Demand © The McGraw-Hill Companies, Inc., 2003 chapter 16 DAVIS AQUILANO CHASE PowerPoint Presentation by Charlie Cook Chapter Objectives Introduce the different types of inventories that exist in a company and provide a rationale for why companies maintain inventories. Identify the various costs associated with carrying and maintaining inventories. Define the classical inventory models and the conditions necessary for them to be applicable. Show how economic order quantity is calculated for each of the different inventory models. © The McGraw-Hill Companies, Inc., 2003 16– Chapter Objectives (cont’d) Introduce the single-period inventory model and the concept of yield management with respect to service operations. Present some of the current inventory management trends and issues that exist in companies today. © The McGraw-Hill Companies, Inc., 2003 16– Managerial Issues Inventory is no longer viewed as an asset Product life cycles are becoming shorter increasing the likelihood of product obsolescence. Inventory concealing other problems. The high costs of inventory storage. © The McGraw-Hill Companies, Inc., 2003 16– Definition of Inventory Inventory The stock of any item or resource used in an organization, includes raw materials, finished goods, and work-in-process. Inventory Management System The set of policies and controls that monitors levels of inventory and determines: What levels should be maintained. When stock should be replenished. How large orders should be. © The McGraw-Hill Companies, Inc., 2003 16– Types of Inventory Raw Materials Vendor-supplied items that have not had any labor added by the firm receiving the items. Finished Goods Completed products that are still in the possession of the firm that manufactured them. Work-in-Process (WIP) Items that have been partially processed but are still incomplete. © The McGraw-Hill Companies, Inc., 2003 16– Reason for . | F O U R T H E D I T I O N Inventory Systems for Independent Demand © The McGraw-Hill Companies, Inc., 2003 chapter 16 DAVIS AQUILANO CHASE PowerPoint Presentation by Charlie Cook Chapter Objectives Introduce the different types of inventories that exist in a company and provide a rationale for why companies maintain inventories. Identify the various costs associated with carrying and maintaining inventories. Define the classical inventory models and the conditions necessary for them to be applicable. Show how economic order quantity is calculated for each of the different inventory models. © The McGraw-Hill Companies, Inc., 2003 16– Chapter Objectives (cont’d) Introduce the single-period inventory model and the concept of yield management with respect to service operations. Present some of the current inventory management trends and issues that exist in companies today. © The McGraw-Hill Companies, Inc., 2003 16– Managerial Issues Inventory is no longer viewed as an asset .
