Purpose and Function of Inventory Overview............................................................................ 

Session Learning Objectives ...................................................................................................... 

Purpose of Inventory .................................................................................................................. 

Functions of Inventory ................................................................................................................ 

Purpose of Decoupling/Buffering Inventories........................................................................... 

How Much Inventory Is Needed? ............................................................................................... 

Components of Inventory Decisions .......................................................................................... 

Defining Cycle Inventory............................................................................................................. 

Defining Safety Inventory ........................................................................................................... 

Defining Seasonal Inventory ...................................................................................................... 

Inventory Cost ............................................................................................................................. 

Unit Costs .................................................................................................................................... 

Order Costs .................................................................................................................................. 

Inventory Carrying Cost Components ........................................................................................ 

Stockout Cost .............................................................................................................................. 

Capacity-Related Costs ............................................................................................................... 

Inventory Valuation ..................................................................................................................... 

Surplus/Obsolete Inventory ....................................................................................................... 

Transportation Cost .................................................................................................................... 

Measuring Inventory Performance ............................................................................................ 

Cost-Benefit Trade-Off ................................................................................................................ 

Review, Terms, Discussion Questions, Exercises ..................................................................... 

Terms Check ................................................................................................................................ 

Performance Check .................................................................................................................... 

Discussion Questions ................................................................................................................. 

Case Study ................................................................................................................................... 

Suggested Additional Readings .................................................................................................