Inventory Management Explained: A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems


Inventory Management isn't easy. If it were, more companies would be good at it. But being competent at managing your inventory isn't all that difficult either. Inventory Management Explained helps readers build a solid understanding of the key planning aspects of inventory management. It does this by clearly explaining what inventory management is, but then goes well beyond typical inventory management books by tearing apart the calculations and logic we use in inventory management and exposing the hidden (or not so hidden) flaws and limitations. It then builds on this by showing readers how they can use their understanding of inventory management and their specific business needs to modify these calculations or develop their own calculations to more effectively manage their inventory. The emphasis on practical solutions means readers can actually use what they've learned. For those new to inventory management, the author includes highly detailed explanations and numerous examples. Instead of archaic mathematical syntax, the author explains the calculations in plain English and uses Excel formulas and spreadsheet examples for many of them. For the experienced practitioner, the author provides insights and a level of detail they likely have not previously experienced. Overall, Inventory Management Explained does actually explain inventory management, and in doing so, exposes the good, the bad, and the ugly aspects of it. But more importantly, it leaves the readers knowing enough to be able to start making smart decisions about how they manage their inventory.

Inventory Management Explained: A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems |David J. Piasecki (Author) | Ops Publishing 

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Table of Contents
Part 1: The Basics and the Big Picture
What is inventory management?, Why do we carry inventory?, Manufacturing and procurement strategies, Inventory tracking methods, Inventory management tasks, Hype, history and the real deal, The Big Picture.

Part 2: Tools of the Trade
Computer systems, What’s good enough?, A note on “cheats”, The changing role of inventory managers, The scope of this book.

Part 3: Forecasting Part 1: Basic Concepts and Techniques
Forecasting terminology, Forecasting generalizations, Mathematical forecasting methods, Forecast error measurement, Regression analysis, Bullwhip effect.

Part 4: Forecasting Part 2: Now It Gets Complicated
Trend revisited, Exponential smoothing revisited, Adaptive smoothing, Black-box forecasting, Human input.

Part 5: Forecasting Part 3: Putting It All Together
Setting up a forecasting system, More Forecasting Stuff, Summary.

Part 6: Safety Stock
How do we go about calculating safety stock, Incorporating the forecast, Incorporating lead time, Incorporating order cycle, Relative history, seasonality, and trend, Biased forecasts and negative variability, Are we there yet?, Where do I get my fill rate targets?, A quick note on safety stock and dependent demand items.

Part 7: Order Quantities / Lot Sizes
Answering the question: How much to make or order?, Economic order quantity (EOQ), Order costs and carrying costs. Getting them right, Incorporating quantity discounts, Seasonality and trend, Using period order quantity (POQ), Using optimization, My experience with advanced optimization programs, More lot-sizing stuff, Inventory reduction strategies, My closing argument.

Part 8: Ordering Systems
Knowing how much you have, Understanding lead time, Ordering systems.

Part 9: MRP, Multi-plant MRP, and DRP
The basic MRP calculations, Multi-level BOMs, Master Production Schedule (MPS), Finite versus infinite capacity scheduling, More MRP stuff, Lot sizing in MRP, What’s wrong with MRP?, DRP and Multi-plant MRP.

Part 10: Measurement and Analysis
Service Levels, Inventory turns, ABC stratification, Gross Margin Return on Inventory Investment (GMROII), Excess and obsolete inventory, Fun with ratios, Dock-to-stock cycle measurement, Forecast error/accuracy recap, Measuring supplier performance, Product data management.

Part 11: Wrapping Things Up
Vendor managed inventory, Consignment inventory, Collaborative planning, Postponement, Lean, TPS, JIT, TOC, QRM, TQM, Six Sigma, The make-or-buy decision, Implications of overseas sourcing, The purchasing function, Quick recap and tips, Final comments.


Written by IISCM

Integrated Institute of Supply Chain Management, a unit of Fhyzics Business Consultants Private Limited specialising in supply chain management consulting and education. IISCM trains and certifies SCM professionals in procurement, supply chain management, inventory, and warehousing.

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