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Essentials of Inventory Management, 2nd Edition

Book Description

Timeless stock-keeping fundamentals meet up-to-the minute technologies to optimize efficiency and drive profits! Inventory management is about more than counting what you’ve got. It’s about understanding business realities and making decisions that balance current demand with future needs—while keeping overhead and operating costs to a minimum. Now in its Second Edition, Essentials of Inventory Management gives inventory professionals the information they need to maximize productivity in key areas, from physical stock issues to problem identification and resolution to technologies like RFID and other automated inventory mechanisms. Perfect for novice and veteran managers alike, this ultra-practical book covers topics such as: Forecasting and replenishment strategies • Differences between retail and manufacturing inventories • Materials requirements planning and just-in-time inventory systems • Simple formulas for calculating quantities and schedules • Management of inventory as a physical reality and a monetary value • Supply chain risk management Complete with detailed examples, handy tools, and a revised and expanded chapter analyzing “Why Inventory Systems Fail and How to Fix Them,” this nontechnical yet thorough guide is perfect for both instructional and on-the-job use.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Contents
  5. Preface to the Second Edition
  6. Chapter 1 Inventory as Both a Tangible and an Intangible Object
    1. Inventory—Who Needs It?
      1. Inventory Costs
      2. The Purpose of Inventory
      3. Types of Stock
    2. Tracking the Paper Life
    3. Electronic Data Interchange
    4. Recap
    5. Review Questions
  7. Chapter 2 Inventory as Money
    1. Accounting for Inventories
    2. How Inventory Is Valued
    3. Inventory on the Balance Sheet
    4. Inventory on the Income Statement
    5. Ratio Analyses and What They Mean
      1. Current Ratio
      2. Quick Ratio or Acid Test
      3. Inventory Turnover Ratio
    6. Profit Margins
      1. Calculating Gross Profit
    7. Merchandising Metrics
      1. Pricing Generally
      2. Selling Price
    8. Obsolete Stock
      1. Why You Have Been Told Not to Dispose of Obsolete Stock
      2. Problems with Convincing Decision Makers That “It’s Gotta Go”
      3. Arguments in Favor of Disposing of Dead Stock
    9. Methods of Disposal
    10. Carrying Cost and Purchasing
    11. Recap
    12. Review Questions
  8. Chapter 3 Physical Location and Control of Inventory
    1. Common Locator Systems
      1. Memory Systems
      2. Fixed Location Systems
      3. Zoning Systems
      4. Random Locator Systems
      5. Combination Systems
    2. Common Item Placement Theories
      1. Inventory Stratification
      2. Family Grouping
      3. Special Considerations
    3. Location Addresses and SKU Identifiers
      1. Significance
      2. Keys to Effectively Tying Together SKUs and Location Addresses
    4. Recap
    5. Review Questions
  9. Chapter 4 Automatic Identification
    1. The Basics of Bar Coding
    2. Elements of a Bar Code Symbol
    3. Structure of a Generic Bar Code Symbol
      1. Quiet Zone
      2. Start and Stop Characters
      3. Data Characters
      4. “X” Dimension
    4. Symbologies: Bar Coding Structural Rules
      1. Discrete and Continuous Symbologies
      2. Symbology Summary
      3. Popular Symbologies Found in the Inventory World
    5. Scanning Basics
      1. Printing Basics
    6. Bar Code Applications
    7. The Basics of Radio-Frequency Identification
    8. RFID Tag Types and Classes
    9. Bar Code versus RFID
    10. RFID Item Identification
    11. The Advantages of RFID
    12. The Problems Associated with RFID
      1. Lack of RFID Standards
      2. Money, Money, Money
      3. System Disruption Vulnerability
      4. RFID Reader Collision
      5. RFID Tag Collision
      6. Security, Privacy, and Ethics Problems with RFID
    13. Recap
    14. Review Questions
  10. Chapter 5 Planning and Replenishment Concepts
    1. Replenishment Costs
    2. Types of Inventory Management
      1. Independent Demand Inventory
      2. Economic Order Quantity Formula
      3. Dependent Demand Inventory
      4. Inventory Objectives
    3. Enterprise Resource Planning
    4. Recap
    5. Review Questions
  11. Chapter 6 Why Inventory Systems Fail and How to Fix Them
    1. Inventory System Failure: A Case Example
    2. Discussion of Example Case
    3. Metrics
      1. Inventory Record Accuracy
      2. Fill Rates
    4. Tools with Which to Uncover System Dysfunctions
      1. Run Charts
      2. Flow Charts
      3. Logic Charts
      4. Variance Reports
    5. Cycle Counting
      1. Annual Inventories
      2. Cycle Counting
      3. Cycle Count Methodologies
      4. Control Group Cycle Counting Method
      5. Location Audit Cycle Counting Method
      6. Random Selection Cycle Counting Method
      7. Diminishing Population Cycle Counting Method
      8. Product Categories Cycle Counting Method
      9. A-B-C Analysis Cycle Counting Method
      10. When to Count
      11. Who Should Count
    6. Recap
    7. Review Questions
  12. Chapter 7 Basics of Supply Chain Risk Management
    1. SCM in a Perfect World
    2. Primary Risks in SCM
      1. Globalization and Supply Chain Complexity
      2. Conflicting Interests
      3. System Fluctuations over Time
      4. Evolving Relationships
      5. Product Complexity
      6. Inadequacy of Insurance
      7. Suppliers
      8. The Bullwhip Effect
      9. Disruption in Communications
      10. Inadequate Software
    3. Suggested Solutions to SCM Problems
      1. Analysis of Risks
      2. Supplier Assessment
      3. Lessen the Bullwhip Effect Through Coordination Within the Supply Chain
      4. Contracts That Do and Don’t Coordinate the Supply Chain
      5. Inventory Levels
    4. Recap
    5. Review Questions
  13. Bibliography
  14. Index