Inventory Fundamentals IITEM inventory management. Suppply and demand patterns Objetives of inventory management. Aggregate inventory management. Inventory and the flow of material. Funtion of inventories. Inventory cost. Financial statements and inventory. ABC inventory control. Flow and Kinds of inventory needed Supply and demand patterns Costs associated with inventories Functions that inventories perform Objetives of inventory management Involves Which individual inventory items are most important. How individual items are to be controlled. How much to order at one time When to place an order. Rules Raw materials Work in process (WIP) Maintenance, repair, and operational suppliers (MROs) Finished goods Distribution inventory Classifications Demand must be Predictalbe, stable, and relatively constant Demand Anticipation inventory Fluctuation inventory (Safety sotck) Lote size inventory Trasportation inventory Classified Maximun customer service Low cost plant operation Minimun inventory investment Objetives Item cost Carrying cost Capacity associated cost Ordering cost Stockout costs Decisions Balance Sheet Income statement Major Capital Retained earings Income Revenue Expenses Cost of good sold General and administra -tive expenses Group A Group B Group C Decisions About 20% of the items account for about 80% of the dollar usage. About 30% of the items account for about 15% of the dollar usage. About 50% of the items account for about 5% of the dollar usage.