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Decision Support Systems for Inventory - Lesson Summary

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The key points from this module are:
Inventory is a stock of material used to satisfy customer demand or support the production of services or goods.

Inventory management is the planning and controlling of inventories to meet the organisation's competitive priorities.

Types of inventory
Raw material (RW)
Work-in-process (WIP)
Finished goods (FG)

Economic batch quantity (EBQ) determines the size of a production run (i.e. batch size).

The finite replenishment rate is when the production rate is greater than demand; goods will accumulate at a finite rate.

Safety stock is the additional amount kept of stock kept to safeguard fluctuations in lead time.

A 'service level' is a policy measure set by materials managers to help determine the safety stock level that needs to be kept to protect the managers from stock out situations.

Buffer stock primarily covers the failures beyond their expected values.

The following parameters play the key determinant in material availability:
Inter-receipt- time (i.e, the gap between the successive arrivals of lots)
Lot size being received
Rejection of partial/ whole lots
Consumption of material out of the stocks
The lead time of supply, (i.e, the gap between the receipt and order of material)

A continuous review system is also termed a reorder point system, fixed order quantity system or Q system.

A periodic review system ( P) is also termed a fixed interval reorder system or periodic reorder system, P system or order-up-to-model.