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Summary Chapter 11 - Introduction to Operations and Supply Chain Management (Bozarth) $3.21
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Summary

Summary Chapter 11 - Introduction to Operations and Supply Chain Management (Bozarth)

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Summary of 6 pages for the course Supply Chain Management at UM

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  • April 27, 2014
  • 6
  • 2013/2014
  • Summary
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- inventory: stocks / items used to support production (raw materials / work-in-process items),
supporting activities (maintenance / repair / operating supplies) and customer service (finished
goods / spare parts)

- inventory management is still an important function, even in the Internet age

- inventory is both a valuable resource and a potential source of waste




11.1 The Role of Inventory


I n v e n t o r y Ty p e s
- cycle stock: components / products that are (I) (III)
received in bulk by a downstream partner, Inventory level
gradually used up, and then replenished again in
(II)
bulk by the upstream parter 1 (g Figure 1):
(I) Order received
(II) Inventory drawn down gradually
(III) Another order received Time
- safety stock: extra inventory that companies hold to Figure 1: cycle stock
protect themselves against uncertainties in either
demand levels or replenishment times (g Figure 2): (I) (III)
(I) Order received
Inventory level




(II) Inventory drawn down gradually (II)
(III) Another order received

- anticipation inventory: inventory that is held in
Safety stock
anticipation of customer demand

- hedge inventory: inventory, buildup to buffer Time
against some event that may not happen 2 Figure 2: safety stock

- transportation inventory: inventory that is moving
from one link to another in the s.c.

- smoothing inventory: inventory that is used to smooth out differences between upstream production
levels and downstream demand




1 often thought of as active inventory because companies are constantly using it up and their suppliers constantly replenishing it

2 hedge inventory planning involves a.o.: potential labor strikes, price increases, unsettled governments,...

- 68 - Jannis Mertens

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