7/26/2019 Supply & Demand 10.

ppt

Slide 10.1 
Matching Supply with Demand

Inventory, Logistics and Supply Chain Management

Definition of Inventory
 A term used to describe
• all the goods and materials held by an organization for sale or use
•
 a list of items held in stock

Source

Institute of Logistics and Transport

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 1/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.2 
Matching Supply with Demand

Reasons for Keeping Inventory

Reduce the risk of supplier failure

Protect against lead-time uncertainties

Meet unexpected demands

Smooth seasonal or cyclical demand

Lot size considerations

Hedge against anticipated shortages and price

increases 
Ensure rapid replenishment of items in constant
demand 

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 2/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.3 
Matching Supply with Demand

Aims of Inventory Management

Provide internal and external customers with required

service levels at optimum cost

 Ascertain present and future requirements for all types

of inventory to avoid overstocking

Keep stocks to a minimum by variety reduction

Provide upstream and downstream inventory visibility

in the supply chain

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 3/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.4 
Matching Supply with Demand

Range

Line of sight Bulk read

RFID advantages

Read/write Selectivity

Durability

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005 
http://slidepdf.com/reader/full/supply-demand-10ppt 4/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.5 
Matching Supply with Demand

Manufacturing/Assembly
Factors that DetermineType Organisations – 
the Right Quantity

The demand for the final product

The inventory policy

Whether job, batch, assembly or process production

methods are applicable
Whether demand is independent or dependent

The service level 

Market conditions 

Factors determining EOQ 

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 5/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.6 
Matching Supply with Demand

Forecasting Issues - Questions

1. What is the purpose of the forecast?

2. What is the time horizon?

3. What forecasting technique(s) is far most appropriate?

?
4. On what data must the forecasting be based and how shall it
be analyzed?

5. In what form shall the completed forecast be presented?

6. How accurate is the forecast?

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 6/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.7 
Matching Supply with Demand

Inventory Control Systems

“Push” Elements of “Pull” Systems 

Systems Both “Push”
and “Pull”
Systems

Pre-determined MRP and OPT JIT systems

re-order levels systems 
Periodic review
systems

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 7/8
7/26/2019 Supply & Demand 10.ppt

Slide 10.8 
Matching Supply with Demand

Why Purchasing Professionals Should Have a Grasp of

Inventory Management
1 Inventory is an asset.

Inefficient inventory management will increase costs and

2
reduce profitability.

3 Inventory can enhance flexibility and provide competitive advantages.

4 It needs the co-operation of efficient and effective suppliers.

The armed forces need inventory to maintain operational

5
readiness and performance.

Lysons & Farrington, Purchasing and Supply Chain Management, 7 th edition, © Pearson Education Limited 2005  
http://slidepdf.com/reader/full/supply-demand-10ppt 8/8