Inventory Decision-About Inventory Decision:
What is the inventory decision-making?
Inventories refer to the daily production and management process for the production or sale of the reserve supplies. Inventory decision-making or decision-making can be divided into inventory, inventory number of decision-making, inventories and other aspects of decision-making period. Among them, the decision whether or not inventory problems involving zero inventory; inventory decisions determine the number of bulk inventory, including procurement and production of bulk quantities and the company's operations within the warehouse and cargo management; inventory issue term insurance policy involving goods and commodities Poly period problem.
Inventory the contents of the decision-making
Order point decision
The basic nature of the inventory is reduced when the period with the extraction and, therefore business managers need to decide what level of surplus goods must issue a new order to avoid time completely out of stock, the level of the remaining goods as ordered point. If the order point is 20, it indicates that goods stored in down to 20 business units, it must issue the order to maintain proper inventory levels. Order point depends on the order lead time, utilization, service levels and other factors.
1, the order lead time
Is received from the purchase order issued to the average time required for the goods. The longer this time, the higher the order point. For example, to wait 20 days after order to obtain goods more than just 10 days to be used in high-order point, that is, to advance orders.
2, the utilization rate
Is defined as a period of time, the customer's average purchase quantity. The higher the rate, the order point should be higher. Therefore, the sale of 4 units per day than the daily sales of 200 units of high-order point.
3, the service level
Refers to the company hopes to complete the inventory directly to the percentage of customer orders. The higher level of service, order point should be higher. Changes in usage and order lead time is larger, the order point should be higher. The only way to reach a certain level of service. Generally the higher order points called safety stock inventory, which is restocking the opposite. The size of enterprise security inventory, customer service and cost depend on two factors.
Thus, "when ordering" This decision, but for a minimum inventory level, this level is reached, it shall issue a new order. The higher the rate, order rate and the longer lead time and order changes in conditions, the higher the level of service, the required point of order should be higher. In other words, the order point is balanced out by the risk of excessive costs and inventory decisions.
Order quantity decisions
How many business-related orders (ie order quantity) decisions directly affect the order frequency. Order quantity is larger, the lower the frequency of purchase (that is, the fewer the number of purchases). Cost per order to spend, but also need to keep a large inventory costs. Companies in determining the order quantity, we should compare the cost of ordering and inventory carrying costs of these two different costs.
Order cost is the cost of processing orders, for dealers and manufacturers in terms of different. Dealer cost is the time from order to issue the order to the receipt, inspection costs incurred, such as the item costs (stamps, order forms, envelopes, other items of expenditure) and labor costs. Different business-to-order processing costs estimated value of the difference, some are real, that is, the difference from the actual operating costs; some people, that is different from the accounting method.
Manufacturers installation costs and ordering costs include operating costs. If the device is low cost, the manufacturer can often produce the product, the product cost will become very strong. However, if the unit cost is too high, the manufacturer only in the case of mass production in order to reduce the average unit cost. At this point, the enterprise is willing to take the number of mass production but production less production.
Tied up in inventory costs
Inventory carrying costs can be divided into four categories:
1, inventory space costs
Inventory is often necessary to save heat, light, refrigeration, security and other specialized services, the equipment can be leased, can also be built, but whether it is leased equipment or self-built equipment, inventories are the more space the higher the cost, and the relevant personnel management costs will lengthen as the storage period increased.
2, the cost of capital
Both the so-called problem of inventory turns. In fact, the inventory is also a form of business investment, so companies would lose the opportunity to invest in other income. The more inventory, inventory turnover, the lower the flow of capital slowed, the inventory of all the higher cost of funds in virtually.
3, taxes and insurance premiums
Business inventories are usually required to be insured, and pay taxes. The amount of purchase decisions in the development, must take into account two charges.
4, loss of depreciation and obsolescence
Corporate stock shall take damage, lower prices, scrap and other risks. Although this cost is difficult to calculate, but it is clear more inventory, the cost is higher.
Inventory control methods used
1. Hanging sign system (hang-label system). This is a traditional method of inventory control. The basic idea is: inventory of goods for each item of material goods, are hung with a number of labels. When inventories are sold or distributed production units used, is about to remove the label, record "and the perpetual inventory records" on to control. In this case, in order to ensure that will not happen without downtime to be expected or temporary supply of the goods must be in "perpetual inventory records," with the minimum storage capacity (ie, insurance, storage), once the balance reaches a minimum level of real balances, should be submitted purchase applications. If companies do not use the "perpetual inventory records" should be removed every time the inventory label stored centrally to the provisions of the Order Date, and then store the label collection statistics of the number of its issued and according to order as a basis for application .
2. ABC analysis. When the stock of industrial and commercial enterprises unusual species complex, the level of disparity between the unit price, the amount of stock and not a moment, in order to use inventory control does not mean power, and can be focused, be treated differently, then the use of ABC method is more simple.
ABC method, the basic idea is: first of its stock multiplied by the annual average consumption in its unit cost, and according to certain standards, they are divided into the amount of A, B, C categories; then calculate the various types of inventory consumption accounted for the total number, the percentage of the total cost of consumption; and then depending on the circumstances of these three types of inventory control measures were different. Practice proves that the larger companies, once after using ABC analysis for inventory control of materials and supplies of goods, not only very convenient, and the effect is very significant.
