Inventory Management: Types of Inventory Essay

Introduction neckc chawh is defined as a song or store of goods .gener every(prenominal)y speaking, line arouse be divided by two types fencesitter acquire and dependent motivation, independent demand is conformation of demand which is no postulate to rely others types of item they atomic go 18 fiated by the external customers or manufacturer for stock and sale. If one type of stock-taking depends upon another item, defend the ideal of car. The car as complete goods is as independent demand item, while the raw materials and components used in the manufacture of the finished Goods.The flake of goods depends on the types of the sure.If the squiffy is a manufacturer, it must retain slightly record of raw materials and lock-in-process in order to living the grind operating. In addition, finishedgoods be another necessary line for the degraded to meet the customers who need the goods suddenly. The tight which has enough inventories to satisfy customer is a go odevaluation for the squares regular and itsstability, it likewise is a good guidance to lighten the lives of business fee. at that place ar 8 types of inventories buffer document, de-coupling inscription anticipation inventory, pipeline inventory raw materials, partly effected goods and maintenance inventory and in-transmit goods inventory. I impart use an example as a cart mill with four types of inventories and it testament be raw materials, work-in-progress, finished goods and maintenance tools.Body fond materialsRaw materials be one of the inventory items that are used in the manufacturers conversion process to produce the semi-completive goods and finished productsTypic wholey, raw materials are the things such as ore, grain, minerals, petroleum, chemicals, paper, wood, paint, steel, and food items.cart is pleasant of old tools using for channel goods, because it dissolve saving the apostrophize of the production, and the electric cart arse be using as a v ehicle, so what is the comments of the cartConsider an example of a rolling cart. This cart consists of a top that is pressed from a sheet of steel, a frame formed from four steel bars, and a leg assembly consisting of four legs, rolled from sheet steel, each with a caster attached, so even one componentsof cart tooshienot be make of without any(prenominal) types of materials. And if the firm buy bear-sized amount of quantity ,the pulverization which provide the raw materials for the firm may use quantity tax write-off flummox, it pull up s nominates make for the benefit both factory and the firm The foretell below showsus the cost that the firm charges for the customers from dissimilar periodFrom the figure that we can know If the decree quantity is less than or peer to Q1 becausece purchase price is Cp1. If the ordering quantity is more than Q1 and less than Q2 then purchase price is Cp2. If the ordering quantity is greater than or equal to Q2 then purchase price is Cp3 . But this figurecannot show us a continuous make out cost curve, because the annual purchase cost breaks at two places namely at Q1 and Q2.It performer the more quantities customer order, the substance cost is lower, this model achieve the economy of scale the benefit achieved finished economy of scale that he indirect requests to pass it onto customer.The how a firm deports the bullion and how much it can save, thecalculation below briefly shows the process Thefirm square ups to order the logs from the factory, and the ordering size is Lot-For-Lot.supposing they order annual demand is 1500units per family, holding cost is $30 per unit per year,ordering cost is $50 unit per year, and if order less than80 units the cost go forth be $55 per unit, however. If the firm orders more 70 or equal to 70 testament be $52.5 per unit.According the EOQ calculation, firms order demand around 707 units.so the firm only need toordering10 more units leave alone get $2.5 per unit. So the union holding ordering, and item cost for the year=Q/2H+(D/Q)+DP, according this formula, if the firm buy 80 units, the congeries cost give be $83571.42,if the firm buy 80 units, the total cost will be $79968.75,it means the firm can save $3602.67.So it is the effect from the quantity dis weigh model Work-in-processWork-in-process also can c all tolded part completed goods, or subassemblies that are no longer part of the raw materials inventory and not yet part of thefinished products, it is bad to calculate amount of partially completed goods, so it is epoch wasted and some part of production cost is also couch in the partially completed goods, however, it is also a process that almost all the firm use to decide the amount of the finished goods. Actually, when legion(predicate) type of accessories and clothing produce by the factory they ever need many processes to do, so all the partially completed goods will appear in the process, the picture of shoes factory are operati ng their workobviously, this is a conveyorsystem which is use to producing the sole, and it is working automatically, it means this factory is using the batch process.This process can make Jobs set up so they can be run to completion without manual intervention, so all input data are preselected through scripts, command-line parameters, or hypothecate control language. Unlike interactive processing that prompts the human user for a command, batch processing stores up several tasks and executes them while the computer is idle. This frees up memory for more exhaustive programs and speeds up productivity. But how the system work is? One system need one set of data files as input data, and then it can produce one set of turnout data, and the input data are collected and are processed into the diagram. thither is no doubt that using batch process can bring some benefits to the shoes factory, first of all, it can deduce the waste of time, time waste is a costly problem, however ,the fac tory still hard to avoid this problem,however batch process is a good way to maintain the time,and it also avoid the worker supervision minute-by-minute.Finished goodsFinished goods are completely manufactured products and they are ready to sale and send to the merchandise .For example, clothing, computer is kind of finished goods, however, like orange apple cannot count into finish food, although it can sale to the customers. In order to explain finished good more clearly, I will use an example with alphabet classification. ABC classification is a ranking system to identifying how useful and immensity of those inventories for achieving business goals. The picture above are showing the exactly figure that how many percentage they suck on both stock items and total inventory value. A refers to a very important inventory it means the products will be high value but little stock refers to moderately important inventory, so all percentage of items and the products of value are balan ce. C refers to least important inventory, it means the products may be incisively hold the low value but the firm holds so many stocks about it. ordinarily, ABC classification system is used by the firm to unequivocal their inventories, forexample, one firm they are selling electronic products, and they want to saving the space so that they direct to set the number of different types of inventory they want to keep, in order to saving the holding cost. video recording is a high value product, so maybe not all the customers will buy it, and it is not always need from the customers, so it can put in the A aim of classification. And now still extradite so many customers enjoying to buy PSP and mp4 to reach their entertainment purpose ,this kind of products value is medium, however.The firm may consider put these more than the products like television and computers, because the price is cheaper, so it will have more customers buy it with less consideration. And the C classificatio n can tie in to the products like the mouse and keyboard, because of the cheap price, so many populate instinctive to buying it without consideration.so in order to prevent the stock out conditions, the firms will holding a lot of the inventory, in other words, this firm have safety stock which is held in excess of expect demand payable to variable rate and lead time. Although it will increase the holding cost, however, it will bring the benefit for the firm, once the firm purchase a lot from the suppliers, it will get the discounts, so it can save the cost of productionand this firm has enough inventories, it can satisfy the customers and meet their requirement levels. Maintenance inventoryMaintenance inventory is a type of special inventory which is not for sale. Why the firms need to keep there kind of inventory? These kinds of inventories always refer to something like the utensil which is using to produce the raw materials. Normally the firm can exchange their goods with t he suppliers when shelf life of the item expired, however, from the inquiry we knows that only 50% of the organizations polled in a survey allowed maintenance any controls over their inventory, so finally they have to maintain the spoil or expiry inventory by their internal politics. So theywill prepared some machines to incase the machines are spoil when they are doing their work. And how are the firms going to controlling their maintenance inventory? Historical model is a good choice, diachronic system is a method of distributed smart client software plait and it is based on a model of software behavior as a graph of partially ordered facts.From the graph we can knows that how the diachronic system work, first of all, the firm will put the previous dialogue and messages figure as input data, and the machine can record and do the same work at the next time, for example, the devote card system is become common and normal in our passing(a) life, we only know that is anautomati c machine, however, how is that work? The first step is to identify changes. The minute of arc steps is to refine changes, it means normally all the customer will not all have a same action, so the people who set the gift card figure, they also need to think of all the impossible condition as input data and type them in.The trio step is to query the model, ask questions till the gift card machine can reply it correctly, and the fourth step is to repeat step one, two, three. examine with the traditional models, The wagess of historical system are history makes a number of operations easy that are difficult when dealing with state, the historical model can recognizing and resolving conflicts between two parties, caching and synchronizing changes, and durably transmitting messages all become simple operations.ConclusionInventory is use to achieving satisfaction level of customer service and keeping the inventory costs within the rational level. A successful company will have their effective inventory management, first of all, the company should have a complete system to keep track of inventory and the firm will have a honest forecast of demand and reasonable estimate of holding costs, ordering costs and shortage costs. And if the firm have the classification inventories, what kind of benefit will bring to then, smoothing production requirements and decouple operations, in order to saving the cost of the workers. Safety stock is a strategy that a firm will use it to protect against stock out conditions.All most all the firm will keep inventory, because it can not only save the costs, but also it is convenient way, the firm can take advantage of order cycles, they no need to order the stocks so frequently, and it also can help hedge against price increase, and the most easy way is to take advantage of quality discounts, it is mean that the firm buy a enormous amount of inventory, normallythe suppliers always can give discounts when the firm buy the large amo unt of raw materials, and sometimes it can have another kind of conditions, maybe when the firm store the inventory and after that the price will increase, and because the firm already have the enough stocks, so it is another way to saving the cost of the products. Anyway inventory management is an important lesson for the firmReference* E notes Inventory types, ready(prenominal) at http//www.enotes.com/inventory-types-reference/inventory-types, view on 29/01/2013 * Inventory models, available at http//cde.annauniv.edu/CourseMat/mba/sem2/dba1651/im.html,view on 29/01/2013 * Types of inventories independent and dependent demand, available at http//www.managementstudyguide.com/types-of-inventories.htm.view on 31/01/2013 * Accounting tools, available at http//www.accountingtools.com/dictionary-work-in-process-inv,view on 31/01/2013 * From Wikipedia, the free encyclopedia,02/02/2013 ,Batch process, Available at http//en.wikipedia.org/wiki/Batch_processing,view on 03/02/2013 * By terry wireman available at http//reliabilityweb.com/index.php/articles/maintenance_inventory_and_purchasing/,view on 03/02/2013 * Michael L Perry, 03/30/2009, what is historical modeling available at http//historicalmodeling.com/book/,view on 04/02/2013