INTRODUCTION TO THEORY

OF INVENTORY
Wakhid A. Jauhari
Teknik Industri UNS
2017
Outline of the Course (Contd)
Introduction to inventory theory
Problems and performances of inventory
Inventory model for deterministic static
case
Inventory model for dynamic static case
Stochastic inventory model
Selection and classification of inventory
model
 Outline of the Course
Joint Replenishment Problem(JRP)
Inventory model with system contraints
Simulation for inventory system
Integrated inventory model
 References
Tersine, R.J., (1994), Principles of Inventory and Materials
Management, Prentice Hall International
Silver, E.A. and Peterson, R. (1985) Decisions Systems for
Inventory Management and Production Planning. Singapore: John
Wiley & Sons.
Muckstadt, J.A and Sapra, A. (2010) Principles of Inventory
Management : When You Are Down to Four, Order More,
Springer Series in Operations research anfinancial
engineering.
Axsater, S. (2006) Inventory Control, Springer
Hadley, G. and Within, T.M. (1963) Analysis of Inventory Systems.
Englewood Cliffs, New Jersey: Prentice-hall.
Zipkin, P. (2000), Foundations of Inventory Management, Mc
Graw Hill.
Chopra and Meindl, (2004) Supply Chain Management, Prentice
Hall
Bahagia (2006), Sistem Inventory, Penerbit ITB.
Assesment
Small task 15%
Final task 25%
Competence tests 60%
Test 1 30%
Test 2 30%
Definition of Inventory
All resources that are in idle condition and
waiting for next processes.
Inventory is a kind of waste that must be
eliminated
Inventory is needed by the system to satisfy
the demand
The above trade-off should be considered in
decision making
 Why it should be managed well?
If we dont manage it,
the production process
will stop

Inventory TRADE
OFF

Inventory is idle resources

and waste
 Type of inventory
PRODUCTION SYSTEM

Production floor

Raw Finished
Supplier Customer
material product

purchase Work-in-process Customer

order order
material manufactuirng
order order

MATERIAL FLOW INFORMASI FLOW

 Type of inventory in manufacture
system
Raw materials
Part or purchased goods
Work-in-process products
Component parts
Tools, machinery, and equipment
Finished products
Type of inventory outside the
manufacture system
Operational Inventory
Inventory that satisfies the customers demand.
Generally, the inventories locates at supplier untill
retailers.
Buffer Inventory
Inventori used to anticipate the shortage and to
reduce the impact of the fluctuation of random
demand
Type of inventory outside the
manufacture system
Cycle Inventory
Inventori used to cope with the fluctuation in
cyclical demand
Seasonal Inventory
Inventori used to cope with the fluctuation in
seasonal demand
Inventory functions
Time Factor
Discontinuity Factor
Uncertainty Factor
Economy Factor
Functional Classification of Inventory
(contd)
Working stock
Usually knwn as lot size stock
Safety Stock
Usually known as buffer or fluctuation stock
Anticipation stock
Usually known as seasonal stock
Pipeline stock
Usually known as transit stock or wip
Functional Classification of
Inventory
Decoupling stock
Inventory accumulated between independent
activities or stages to reduce the requirement
for completely synchronized operations.
Psychic stock
Retail display inventory carried to stimulate
demand and act as a silent salesperson