E-O-Q
An order for supplies is placed when the existing stock reaches reorder point.
Buying in large quantities has the problems of high carrying cost.
Buying in small quantities reduces holding cost but adds to ordering cost.
EOQ or Q Opt(Optimum Quantity) is the order size at which the total cost, comprising ordering cost and the carrying cost is the least.
Minimum-Maximum technique
Used in connection with manual inventory control systems.
The minimum quantity is established in the same way as any reorder point.
The maximum is the minimum quantity plus the optimum lot size.
The effectiveness of a minimum-maximum system is determined by the method in which the minimum and maximum parameters are established.
If the minimum are based on an objective rational basis, the system can be very effective.
Two-bin Technique
One of the oldest systems of inventory control
Adopted to control ‘C’ group inventories
Stock of each item is separated into two bins
One bin contains stock, just enough to last from the date a new order is placed until it is received in inventory.
The other bin contains a quantity of stock enough to satisfy probable demand during the period of replenishment.
Method
The stock is issued from the first bin.
When the first bin is empty an order for replenishment is placed
The stock in the second bin is utilized until the ordered material is received.
Advantage
Appropriate in conditions in which the rate of consumption is constant
Items which have fairly established & regular lead time.
Disadvantage
Is the requirement of additional storage facilities
Difficulty in keeping the two stocks seperate.
MRP System
Having stock of materials always on hand when needed without carrying excess inventory.
Highly dependent upon computer technology
MRP is most helpful to firms with finished goods & which are subject to uneven demand.
This technique separates the various components and co-ordinates purchasing and delivery with production
Results in materials arriving exactly when needed for production & at the same time, reduces the length of time materials are held in stock
JIT System
Also known as ZIPS (zero inventory production system), MAN (materials as needed), NOT (Nick of time), or ZIN (zero inventories)
No inventories are held at any stage of production and exact number of units is brought to each successive stages of production at the right time
Concept originated from the Motomachi plant of Toyota in Japan
Ex: Xerox
An order for supplies is placed when the existing stock reaches reorder point.
Buying in large quantities has the problems of high carrying cost.
Buying in small quantities reduces holding cost but adds to ordering cost.
EOQ or Q Opt(Optimum Quantity) is the order size at which the total cost, comprising ordering cost and the carrying cost is the least.
Minimum-Maximum technique
Used in connection with manual inventory control systems.
The minimum quantity is established in the same way as any reorder point.
The maximum is the minimum quantity plus the optimum lot size.
The effectiveness of a minimum-maximum system is determined by the method in which the minimum and maximum parameters are established.
If the minimum are based on an objective rational basis, the system can be very effective.
Two-bin Technique
One of the oldest systems of inventory control
Adopted to control ‘C’ group inventories
Stock of each item is separated into two bins
One bin contains stock, just enough to last from the date a new order is placed until it is received in inventory.
The other bin contains a quantity of stock enough to satisfy probable demand during the period of replenishment.
Method
The stock is issued from the first bin.
When the first bin is empty an order for replenishment is placed
The stock in the second bin is utilized until the ordered material is received.
Advantage
Appropriate in conditions in which the rate of consumption is constant
Items which have fairly established & regular lead time.
Disadvantage
Is the requirement of additional storage facilities
Difficulty in keeping the two stocks seperate.
MRP System
Having stock of materials always on hand when needed without carrying excess inventory.
Highly dependent upon computer technology
MRP is most helpful to firms with finished goods & which are subject to uneven demand.
This technique separates the various components and co-ordinates purchasing and delivery with production
Results in materials arriving exactly when needed for production & at the same time, reduces the length of time materials are held in stock
JIT System
Also known as ZIPS (zero inventory production system), MAN (materials as needed), NOT (Nick of time), or ZIN (zero inventories)
No inventories are held at any stage of production and exact number of units is brought to each successive stages of production at the right time
Concept originated from the Motomachi plant of Toyota in Japan
Ex: Xerox