Inventory Modules

Topics: Inventory, Supply chain management, Safety stock Pages: 8 (2056 words) Published: May 27, 2013
Logistics & Transport

- Inventory -

Task 1.1

Itemise some of the inventory held by the following operations:


Food and beverages, bed sheets, toiletries, cleaning equipment


Syringes, overalls, bed sheets

Retail Store:

Clothing, food, drinks

Task 1.2

Using the above illustration, what do you consider to be the aim of the inventory management? Are there any conflicts likely to occur for inventory control?

I consider the aim of the inventory management is maintaining an acceptable level of physical inventory and often centres around managing warehouse inventory. Conflicts likely to occur within the inventory control could be issues such as overstocking items or complete stock outs.

Task 1.3

Find out if your organisation uses the logistics approach in managing its operations. To what extent does this approach give your organisation some competitive advantage and explain what you think about this.

The organisation I work for relies largely on its approach to logistics in managing operations. With the headquarters of the organisation (which holds the majority of the inventory and a large fleet of delivery vehicles) being situated on the outskirts of London, gives us great geographical positioning within a close proximity of customers. This allows rapid despatch of goods which is essential to keeping customers satisfied. Delivery vehicles along with high demand inventory are also kept at various warehouses across the country. This allows for quicker delivery times and is more cost effective for the organisation as it reduces fuel and employment costs. All of this gives us a competitive advantage as customers not only wants quality goods but they rely upon a quick and predictable delivery service. Being situated in key locations across the country close to are customers with a large fleet of delivery vehicles provides the customer with there requirements.

Task 1.5

Explain what is de-coupling inventory in production or supply chain process of your choice. What is the relationship between de-coupled inventory and postponement.

Decoupled inventory is the cushion or buffer inventory used to keep the production of goods flowing by stocking work-in progress. With the use of decoupled inventory the manufacturing process can be split into groups allowing for each product to be manufactured and distributed independently and in economic lots.

Due to varied customer preferences and taste a strategy has been adapted referred to as 'postponement'. This means that components of a product are produced however the final assembly will be delayed. This allows for higher customisation of the product and lower inventories.

Task 1.6

Which activities add to the cost of inventory and which functions are responsible for incurring them? How does inventory contribute to the value adding activities of your firm?

Stockholding adds to the cost of the inventory due to capital cost, storage cost, loss of interest, administration cost and risk cost. Re-ordering adds cost to the inventory as order preparations will have to be made, transport will need to be arranged, employees will need to be paid for unloading, checking, testing and sorting the goods. Also stock outs will add to the cost by lost orders, backorder costs, facilities utilisation costs and expediting costs.

The firms inventory that can be used to contribute value adding activities will be those that change/ alter the product itself. This can be in any step in raw materials manipulation, production, or adjustments and packing of the product.

Task 2.2

Faced with seasonal demand variability, suggest how your organisation can use inventory management approaches to handle this predictability variable?

The seasonal demand can be estimated using historical data, then this data can be used to create demand forecasts. Using these forecasts my organisation can accurately decide on how much to order and...
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