Real World Inventory

Summary: Inventory basics are a company’s merchandise, raw materials, and finished and unfinished products that have not yet been sold. Real world inventory scenarios are not ideal; time is required to produce and deliver products, and customers’ wait is limited. Ideal environments are digital products, services provided. Inventory is measured in days of inventory (amount of inventory divided by average daily demand). This is easily an understood model. Inventory turns are 365 days of inventory divided by average days of inventory. This is often used, but not very helpful. Inventory cost is a percent of inventory value. This is price inventory costs to hold, and is a crude measurement. Less inventory means you have more cash leftover to invest. The economic of quantity model (EOQ) was first developed around 1900. 1942 was the beginning of logistics systems. After WWII, the Japanese developed lean manufacturing. The 2000s, and the invention of the Internet and cloud computing, made direct access to inventories readily available. The tipping point for supply chains was 1990 when China entered the export market. Inventory …show more content…
Recently, there has been a disruption in the supply of chemicals we use on a regular basis. It is unclear if it is shipping, manufacturing, or the ordering process, but we have been notified to use the chemicals sparingly, as the lead times have been pushed back months. This ties into the discussion during the video regarding the appropriate time to run out. A day or two, or even a week, is acceptable to be out of stock with variations in the supply chain. However, when the product has a lead-time of months, we are forced to locate the chemicals we need locally. Thankfully, being located in Wichita, many aviation companies and distributers surround us, and the transit time to pick up orders is only