COURSE : INDUSTRIAL ENGINEERING LESSON : INVENTORY
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INVENTORY Inventory is stock of any item or resource used in an organisation. It may be defined as stock in hand at a given time, it may held for purpose of later use or sale. It is usable but idle resource possessing economic value and may include stock of the goods, commodities or other economic resources.
TYPES OF INVENTORY Types of Inventory Direct Indirect Supplies rk in Semi Finished Raw Wo Material Process Finished Goods Eg. Cotton, Grease, Stationery Item, Tools, lubricants, etc
DIRECT AND INDIRECT INVENTORY Direct: The inventory items which are directly involved in the manufacturing process and becomes part of the final product. Raw Material: Input into the production system which is worked upon, modified or transformed into the final product. I. Work in process inventory:These are inventories held up between processes and they are still in the process of production 2. 3. Semi-finished: It is half finished goods waiting for production or assembly process. 4. Finished Goods: The final product that is available for distribution and sales. Indirect: Those inventories which do not become part of the final product but is necessary for production of final product.
PURPOSE OF INVENTORY I. It helps in smooth and continuous running of production system 2. To meet variation in production demand. 3. Bulk purchasing may give quantity discount. 4. To provide a safe guard against variation in raw material delivery types 5. Service to customers at short notice.
INVENTORY CLASSIFICATION I. Transit or pipeline: Inventories cannot provide service while in transit as transportation time is involved in transferring substantial amount of resources. 2. Buffer or Safety Stock: This is used when demand rate is more than average demand rate. It is held for protecting against the fluctuations in demand and lead time. Normally, these are not used and used only to prevent stock outs in case of uncertain demand. Lead Time: The time between placing an order and having the goods in stock ready for use is called lead time. 3. Seasonal Inventory: To meet the future demand of a product due to seasonal variation. Example fans and coolers in summer, warm clothes in winter, etc. 4. Anticipated Inventory: These inventories are build up due to anticipated demand in future like big selling forecast, price hike
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