This presentation includes notes collected from various sources from internet during my study journey with regard to the topic Warehouse Management & Inventory Management

1. Warehouse and Inventory Management

2. • Machines is not an inventory
• Ex of Inventory : Raw material, Finished products, Consumable tools
• Ex of costs are usually involved in inventory decisions:
1. Cost of ordering
2. Carrying cost
3. Cost of shortages
• Machining cost is not a cost involved in inventory decisions.
• The cost of insurance and taxes are included in Inventory carrying cost.
• ‘Buffer stock’ is the level of stock : Minimum stock level below which actual stock should not
fall
• The minimum stock level is calculated as : Reorder level – (Nornal consumption x Normal
delivery time)
• For Inventory control :
• Economic order quantity has minimum total cost per order,
• Inventory carrying costs increases with quantity per order,
• Ordering cost decreases with lo size

3. • The time period between placing an order its receipt in stock is known as : Lead time.
• Re-ordering level is calculated as : Maximum consumption rate x Maximum re-order period.
• Average stock level can be calculated as : Minimum stock level + ½ of Re-order level.
• The Economic Order Quantity (EOQ) is calculated as : (2 D*S/h)^1/2 where D=Annual
demand (units), S=Cost per order, h=Annual carrying cost per unit.
• {(2*40*2000)/10}^1/2 = 400

5. Answer : {(2*25000*210)/25}^(1/2) = 648