Although integrated logistics managers prefer no inventory in the pipeline, some inventory is necessary. The integrated logistics manager should be able to identify and effectively manage the functional inventories.
Cycle stock is the product consumed through sales or use and replenished through ordering. In-process or modified but not converted to finished goods. Inventory en route via a carrier is known as in-transit inventory.
Safety stock, or buffer stock, protects the firm against stock outs due to unexpected demand fluctuations. Seasonal stock is material bought or made in advance of production demand requirements. Promotional stock anticipates demand increases from special promotions or sales.
Nothing is more devastating to the introduction of a new product than a stock out. Speculative stock hedges against the possibilities of future price increase. Finally, dead stock os obsolete and cannot be sold.
Raw materials, work in process, and finished goods describe inventories in different stages of completion. As goods are converted from raw material to work-in-process to finished goods, value is added to them.
Raw material inventory has less value than work-in-process. For instance, leather is not valued as highly as leather automobile seat covers. The seat covers are still more valuable when they have been installed in an automobile.
Cycle stock is the product consumed through sales or use and replenished through ordering. In-process or modified but not converted to finished goods. Inventory en route via a carrier is known as in-transit inventory.
Safety stock, or buffer stock, protects the firm against stock outs due to unexpected demand fluctuations. Seasonal stock is material bought or made in advance of production demand requirements. Promotional stock anticipates demand increases from special promotions or sales.
Nothing is more devastating to the introduction of a new product than a stock out. Speculative stock hedges against the possibilities of future price increase. Finally, dead stock os obsolete and cannot be sold.
Raw materials, work in process, and finished goods describe inventories in different stages of completion. As goods are converted from raw material to work-in-process to finished goods, value is added to them.
Raw material inventory has less value than work-in-process. For instance, leather is not valued as highly as leather automobile seat covers. The seat covers are still more valuable when they have been installed in an automobile.