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Inventory Management Techniques

This document discusses inventory management techniques. It begins by defining inventory management as tracking inventory quantities entering and leaving a warehouse. The goal is to know inventory levels to manage them correctly. Key techniques discussed include bulk shipments, ABC analysis, backordering, just-in-time, consignment, dropshipping, cycle counting, economic order quantity, minimum order quantity, and FIFO and LIFO costing methods. The document provides details on each technique.

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savio barla
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157 views

Inventory Management Techniques

This document discusses inventory management techniques. It begins by defining inventory management as tracking inventory quantities entering and leaving a warehouse. The goal is to know inventory levels to manage them correctly. Key techniques discussed include bulk shipments, ABC analysis, backordering, just-in-time, consignment, dropshipping, cycle counting, economic order quantity, minimum order quantity, and FIFO and LIFO costing methods. The document provides details on each technique.

Uploaded by

savio barla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Inventory Management

Techniques
Prepared by : Savio Barla
MBA IB 2nd sem
Roll no. 032
What Is Inventory Management?
 Inventory management is a step in the supply
chain where inventory and stock quantities
are tracked in and out of your warehouse.
Goal of Inventory Management
 The ultimate goal of inventory management
systems is to know where your inventory is at
any given time and how much of it you have
in order to manage inventory levels correctly.
Continued…
1. To ensure that the supply of raw material &
finished goods will remain continuous so
that production process is not halted and
demands of customers are duly met.
2. To minimize carrying cost of inventory.

3. To keep investment in inventory at optimum


level.
4. To reduce the losses of theft, obsolescence
& wastage etc.

5. To make arrangement for sale of slow


moving items.

6. To minimize inventory ordering costs.


Why Is Inventory Management Important

 Accurate Order Fulfillment


 Better Inventory Planning and Ordering 
 Increased Consumer Satisfaction 
 Save Time and Money
 Repeat Customers
Inventory Management Techniques

1.Bulk shipments

This method banks on the notion that it is


almost always cheaper to purchase and ship
goods in bulk. Bulk shipping is one of the
predominant techniques in the industry,
which can be applied for goods with high
customer demand.
2.ABC inventory management

ABC inventory management is a technique


that’s based on putting products into
categories in order of importance, with A
being the most valuable and C being the
least. Not all products are of equal value
and more attention should be paid to more
popular products.
3. Backordering

Backordering refers to a company’s decision


to take orders and receive payments for out-
of-stock products. 
4. Just in Time (JIT)

  Just in Time inventory management lowers


the volume of inventory that a business keeps
on hand. It is considered a risky technique
because you only purchase inventory a few
days before it is needed for distribution or
sale.
5. Consignment

Consingment involves a wholesaler placing


stock in the hands of a retailer, but retaining
ownership until the product is sold, at which
point the retailer purchases the consumed
stock. 
6. Dropshipping and cross-docking

This inventory management technique


eliminates the cost of holding inventory
altogether. When you have a dropshipping
agreement, you can directly transfer
customer orders and shipment details to your
manufacturer or wholesaler, who then ships
the goods.
7. Inventory Cycle counting

Cycle counting involves counting a small


amount of inventory on a specific day without
having to do an entire manual stocktake. It’s
a type of sampling that allows you to see how
accurately your inventory records match up
with what you actually have in stock.
8.Economic order quantity.

Economic order quantity, or EOQ, is a formula


for the ideal order quantity a company needs
to purchase for its inventory with a set of
variables like total costs of production,
demand rate, and other factors.

The overall goal of EOQ is to minimize related


costs.
9.Minimum order quantity.

On the supplier side, minimum order quantity


(MOQ) is the smallest amount of set stock a
supplier is willing to sell. If retailers are
unable to purchase the MOQ of a product, the
supplier won’t sell it to you.
10. FIFO and LIFO

LIFO and FIFO are methods to determine the


cost of inventory. FIFO, or First in, First out,
assumes the older inventory is sold first. FIFO
is a great way to keep inventory fresh.

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