1. Inventory Management Prepared By: Prashant Kumar Pandey 7/25/2009 1 Vns InfoSolutions Pvt. Ltd.

2. Definition Inventory is a list for goods and materials held in stock by a business. The French term “Inventaire” means detailed list of goods. Inventories not intended for sale to customers or to clients may be held in any premises for organization uses. 7/25/2009 2 Vns InfoSolutions Pvt. Ltd.

3. Note Inventory is a necessary part of doing business. The functional factors explain the existence of inventory. Inventory can hide operational problems or make problems easier to live with. It is more desirable to eliminate problems than to cover them up with excess inventory 7/25/2009 Vns InfoSolutions Pvt. Ltd. 3

4. E-R Diagram 7/25/2009 Vns InfoSolutions Pvt. Ltd. 4

5. Example:- 7/25/2009 Vns InfoSolutions Pvt. Ltd. 5

6. The Reasons for Keeping Goods Time Uncertainty Economies of Scale 7/25/2009 6 Vns InfoSolutions Pvt. Ltd.

7. Time The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amount of inventory to use in this “lead time”. 7/25/2009 7 Vns InfoSolutions Pvt. Ltd.

8. Uncertainty Inventories are maintained as buffer to meet uncertainties in demand, supply and movements of goods. 7/25/2009 8 Vns InfoSolutions Pvt. Ltd.

9. Economies of Scale Ideal condition of "one unit at a time at a place where user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory. 7/25/2009 9 Vns InfoSolutions Pvt. Ltd.

10. Special Terms SKU (Stock Keeping Unit) NOS (New Old Stock) Stock Out 7/25/2009 10 Vns InfoSolutions Pvt. Ltd.

11. Stock Keeping Unit SKU is a unique combination of all the components that are assembled into the purchasable item. Therefore any change in the packaging or product is a new SKU. This level of detailed specification assists in managing inventory. 7/25/2009 11 Vns InfoSolutions Pvt. Ltd.

12. New Old Stock NOS is a term used in business to refer to merchandise being offered for sale which was manufactured long ago but that has never been used. Such merchandise may not be produced any more, and the new old stock may represent the only market source of a particular item at the present time. 7/25/2009 12 Vns InfoSolutions Pvt. Ltd.

13. Stock Out Stock Out means running out of the inventory of an SKU. 7/25/2009 13 Vns InfoSolutions Pvt. Ltd.

14. TYPOLOGY 1. Buffer/safety stock 2. Cycle stock 3. De-coupling 4. Anticipation stock 5. Pipeline stock 7/25/2009 14 Vns InfoSolutions Pvt. Ltd.

15. Buffer/safety stock:- is held in individual workstation against the possibility that the upstream workstation may be a little delayed in long set up or change-over time. Cycle stock:- Used in batch processes, it is the available inventory excluding buffer stock. De-coupling :- Buffer stock that is held by both the supplier and the user. Anticipation stock:- building up extra stock for periods of increased demand - e.g. ice cream for summer. Pipeline stock:- goods still in transit or in the process of distribution - have left the factory but not arrived at the customer yet. 7/25/2009 15 Vns InfoSolutions Pvt. Ltd.

16. Most manufacturing organizations usually divide their "goods for sale" inventory into: Raw materials - materials and components scheduled for use in making a product. Work in process(WIP) - materials and components that have begun their transformation to finished goods. Finished goods - goods ready for sale to customers. Goods for resale - returned goods that are salable. Spare parts - referred to as Service Parts or spares. 7/25/2009 16 Vns InfoSolutions Pvt. Ltd.

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18. 1. Amount due by due date 2. Amount due after due date* 3. Service location 4. Previous reading 5. Usage for period 6. Previous unpaid balance 7. Meter number 8. Current reading 9. Current charges 10. Cut-Off date 11. Total Due 12. Message area 13. Billing period 7/25/2009 Vns InfoSolutions Pvt. Ltd. 18 *Amount Due after due date includes penalties for late payment.

19. Example of Billing Invoice 7/25/2009 Vns InfoSolutions Pvt. Ltd. 19

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