Essentials of Inventory Management

 Essentials of Inventory Management

Author: Max Muller
Pub Date: April 2011
Print Edition: $39.95
Print ISBN: 9780814416556
Page Count: 272
Format: Hardback
Edition: Second Edition
e-Book ISBN: 9780814416563

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Table of Contents


Preface to the Second Edition

Chapter 1 Inventory as Both a Tangible and an

Intangible Object

Inventory—Who Needs It?

Inventory Costs

The Purpose of Inventory

Types of Stock

Tracking the Paper Life

Electronic Data Interchange


Review Questions

Chapter 2 Inventory as Money

Accounting for Inventories

How Inventory Is Valued Inventory on the Balance Sheet

Inventory on the Income Statement

Ratio Analyses and What they Mean

Current Ratio

Quick Ratio or Acid Test

Inventory Turnover Ratio

Profit Margins

Calculating Gross Profit

Merchandising Metrics

Pricing Generally

Selling Price

Obsolete Stock

Why You Have Been Told Not to Dispose of

Obsolete Stock

Problems with Convincing Decision Makers

That “It’s Gotta Go”

Arguments in Favor of Disposing of Dead Stock

Methods of Disposal

Carrying Cost and Purchasing


Review Questions

Chapter 3 Physical Location and Control of Inventory

Common Locator Systems

Memory Systems

Fixed Location Systems

Zoning Systems

Random Locator Systems

Combination Systems

Common Item Placement Theories

Inventory Stratification

Family Grouping

Special Considerations

Location Addresses and SKU Identifiers


Keys to Effectively Tying Together SKUs and

Location Addresses


Review Questions

Chapter 4 Automatic Identification

The Basics of Bar Coding

Elements of a Bar Code Symbol

Structure of a Generic Bar Code Symbol 96

Quiet Zone

Start and Stop Characters

Data Characters

“X” Dimension

Symbologies: Bar Coding Structural Rules

Discrete and Continuous Symbologies

Symbology Summary

Popular Symbologies Found in the

Inventory World

Scanning Basics

Printing Basics

Bar Code Applications

The Basics of Radio-Frequency Identification

RFID Tag Types and Classes

Bar Code versus RFID

RFID Item Identification

The Advantages of RFID

The Problems Associated with RFID

Lack of RFID Standards

Money, Money, Money

System Disruption Vulnerability

RFID Reader Collision

RFID Tag Collision

Security, Privacy, and Ethics Problems with RFID


Review Questions

Chapter 5 Planning and Replenishment Concept

Replenishment Costs

Types of Inventory Management

Independent Demand Inventory

Economic Order Quantity Formula

Dependent Demand Inventory

Inventory Objectives

Enterprise Resource Planning


Review Questions

Chapter 6 Why Inventory Systems Fail and How to

Fix Them

Inventory system Failure: A Case Example

Discussion of Example Case


Inventory Record Accuracy

Fill Rates

Tools with Which to Uncover System


Run Charts

Flow Charts

Logic Charts

Variance Reports

Cycle Counting

Annual Inventories

Cycle Counting

Cycle Count Methodologies

Control Group Cycle Counting Method

Location Audit Cycle Counting Method

Random Selection Cycle Counting Method

Diminishing Population Cycle Counting


Product Categories Cycle Counting


A-B-C Analysis Cycle Counting Method

When to Count

Who Should Count


Review Questions

Chapter 7 Basics of Supply Chain Risk Management

SCM in a Perfect World

Primary Risks in SCM

Globalization and Supply Chain Complexity

Conflicting Interests

System Fluctuations Over Time

Evolving Relationships

Product Complexity

Inadequacy of Insurance


The Bullwhip Effect

Disruption in Communications

Inadequate Software

Suggested Solutions to SCM Problems

Analysis of Risks

Supplier Assessment

Lessen the Bullwhip Effect through Coordination

Within the Supply Chain

Contracts That Do and Don’t Coordinate the

Supply Chain

Inventory Levels


Review Questions



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