Economics Courses Chapter 3: Procurement and Inventory Management Its goal: to p

rovide the raw materials, consumables, goods and finished product quality and su
fficient quantity at the right time and at the lowest cost possible. I - Traditi
onal methods of inventory management: 1.1) What is a stock? A target of regula
tion and flexibility Example: I build computers. I buy spare parts and I can hav
e a stock of those parts where there will be a delay in delivery, where customer
s buy more products than expected ... allows regular use of labor Example: I sel
l ice cream. I make ice. I sell all the ice in the summer and if I want my staff
to work throughout the year, I factories during the remainder of the year. No
t always possible: the goods according to orders An economic objective: when I
buy large quantities that I can often get better prices. A business goal: wheth
er I want a traditional grocery store and I have no stock, the customer will be
loyal if not just when there is more the product he wants. A speculative goal: t
o provide price gains of the material stored 1.2) Types of costs caused by inven
tory: Three types of costs: 1. Costs associated with ordering: ordering generate
s costs (salary of the person handling it, transport ...) cost of placing the
order total = cost * NbCommandesAnnuelles procurement unit is why that should
make as few commands as possible and thus in order "wholesale" 2. Cost of owners
hip: owning a stock inevitably brings costs (housing and maintains the stock may
deteriorate or become obsolete, often financial cost

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Slide Show very important 1) = total cost of ownership through stock ownership
rates * To minimize the cost of ownership we need to maximize the number of o
rders (while having the correct number of goods ...) 3. Cost related to out of s
tock: stop the production cost of sales or deferred costs related to lost sales
or costs related to lost sales and lost customers rate service = NbDemandeSatisf
aites / NbDemandesTotales Still to minimize stockouts it need as much stock as p
ossible ... 1.3) The optimal management of inventories: 1) The management by exc
eption In business, there are hundreds of references / product ... is often refe
rred to the law '...' Who separates 20% items that represent 80% of the value an
d 80% of items that represent 20% of the value. It is carefully manages the 20
%. 2) The economic management of inventory objective is to establish a program t
o supply / purchase that maximizes the number of ... a. Expression of the averag
e stock See Stock Slide No. 2 Middle = C / 2N b. Speed optimum sourcing View Sli
de No. 3 and No. 4 Find that minimizes the cost of ownership and cost of executi
on. The method of Wilson says that N optimum is reached when cost of ownership =
cost of procurement. The Wilson model has limitations: 1) Nature of products (i
f I sell salads, and that Wilson told me that I must make two commands ...) Do
not walk on perishable products and / or obsolete 2 ) Volume discounts are no
t taken into account that the more you pass large quantities when ordering, the
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v. Minimum stock, stock alerts, and transparent safety stock See No. 5 minimum s
tock is the stock that should theoretically consume between order date and deliv
ery date. Minimum stock = Date of supply (in days) * daily consumption Lets ta
ke between the date of the order and the delivery date! The safety stock is a re
serve to protect against Increased Delivery An increase in consumption durin
g the delivery period, the stock alert is the stock level that triggers the comm
and = Stock Stock Alert Minimum Safety Stock + When we reach this level of sto
ck must be ordered Example: A company uses 5 tons of sand per day, the delivery
period is 10 days. Minimum stock: 5 * 10 = 50 tons The buffer stock was set at 2
days of consumption: Safety stock is: 5 * 2 = 10 tonnes And then the stock aler
t is 50 + 10 = 60 tons soon the stock reached 60 tons of sand, the storekeeper m
ust place an order.€The quantity to be ordered through the previously establishe
d model of Wilson
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II - Modern methods of inventory management: 1) Modern methods of management and
their potential contributions stored: a. The questioning of traditional methods
of inventory management methods are characterized by a traditional forecasts by
flying upstream. The stock buffer when there are differences in consumption dur
ing the year. It generates cost of ownership, etc ... Modern methods are charact
erized by controlling the downstream: It controls only when there are orders, if
possible farm customers. "It controls only when the client paid" They talk ab
out lean management. Example: Dell, Renault Advantages: Custom and limited sto
cks! b. What modern inventory management? The best known is the "right time". Th
is is to adapt production to the actual command of the consumer. Example of how
kanban (Slide 6) Item 3 Item 2 Sales Department Order Department Post a comm
odity service method used quite heavily in the automotive sector and also in s
upermarkets. With direct sales (barcodes) that is triggered commands. v. The exp
ected benefits of reduced storage costs: trigger the production or command to vi
ew the actual demand can better match the pace of orders / production and the pa
ce of demand. Possible enhanced customer satisfaction and corporate image: when
you order a product we have more options than products that are in supermarkets
... Possible improvement of relations with suppliers: when you run this so here
it is that we have confidence in our damn supplier because we have no stock. S
ome companies have very little customer!
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2) The implications and limitations of modern methods of inventory management. I
f we adopt this mode of operation, it involves changes in the functional nature
which are very significant. a. The transformation of work organization before we
run continuously (eight hours per day), when I had too, I put in stock. If I ha
d not enough, I drew in stocks. Now I only produce what is my command: request f
lexible working according to the order! b. A transformation of the relationships
with suppliers "just in time" usually generates higher rates of controls (if I
do not have stock, I must spend a lot of orders) Increases the rate of award!
While the cost of inventory management (ownership) is transferred from the suppl
ier! This increases the cost of raw materials! v. An increased risk of stock o
uts increases Ca damn risk out of stock. See slide # 7 Limits inventory manage
ment. Conclusion: In an overall sense of more and more companies are looking for
is total quality! Zero five Olympics: Stock 0 [Approved "just in time
"] 0 paper [Information processing easier] 0 fault [No shutdown] 0 within [Flexi
ble production] 0 default [No defective products])
eight zero (0 complaint about the quality of work life [staff satisfaction], 0
scorn [toward all partners] and 0 injury) Lets have "certifications" ISO
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