physical inventory & warehouse layout planning
DESCRIPTION
Physical inventory & warehouse layout planningTRANSCRIPT
PHYSICAL INVENTORY & WAREHOUSE LAYOUT
PLANNINGBy:-
Chinmaya Kumar Sahu
Aswini Kumar Nayak
INDIAN INSTITUTE OF TOURISM & TRAVEL MANAGEMENT
INVENTORY DEFINITION
A stock of items held to meet future demand
Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business
Introduction
Constitute significant part of current assets
On an average approximately 60% of current assets in Public Limited Companies in India
A considerable amount of fund is required
Improper inventory affects long term profitability and may fail management ultimately
10 to 20% of inventory can be reduced without anyadverse effect on production and sales by usingsimple inventory planning and control techniques
Types of Inventory
Work in
process
Work in
process
Work in
process
Finished
goods
Raw
Materials
Vendors Customer
Nature of Inventories
Raw Materials – Basic inputs that are converted into finished product through the manufacturing process.
Work-in-progress – Semi-manufactured products need some more works before they become finished goods for sale.
Finished Goods – Completely manufactured products ready for sale.
Supplies – Office and plant cleaning materials not directly enter production but are necessary for production process and do not involve significant investment.
Reasons To Hold Inventory
Meet variations in customer demand:
Meet unexpected demand
Smooth seasonal or cyclical demand
Pricing related:
Temporary price discounts
Hedge against price increases
Take advantage of quantity discounts
Process & supply surprises
Internal – upsets in parts of or our own processes
External – delays in incoming goods
An optimum inventory level involves three types
of costsOrdering costs:-
Quotation or tendering
Requisitioning
Order placing
Transportation
Receiving, inspecting and storing
Quality control
Clerical and staff
Stock-out cost
Loss of sale
Failure to meet delivery commitments
Carrying costs:-
Warehousing or storage
Handling
Clerical and staff
Insurance
Interest
Deterioration, shrinkage,
evaporation and obsolescence
Taxes
Cost of capital
Dangers of Over investment
Unnecessary tie-up of firm’s fund and loss of profit – involves opportunity cost
Excessive carrying cost
Risk of liquidity- difficult to convert into cash
Physical deterioration of inventories while in storage due to mishandling and improper storage facilities
Dangers of under-investment
Production hold-ups – loss of labor hours
Failure to meet delivery commitments
Customers may shift to competitors which will amount to a permanent loss to the firm
May affect the goodwill and image of the firm
Functions of Inventory Management
-Track inventory
–How much to order
–When to order
FACTORS INFLUENCING EFFECTIVE USE OF WAREHOUSES
• Cube utilization and accessibility
• Stock location
• Order picking and assembly
• Physical Control & Security - Elements
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Design Criteria
•Warehouse design criteria address physical facility characteristics and product movement.
•Three factors to be considered in the design process are:•the number of store's in the facility,
•height utilization, and
•product flow.
PRINCIPLES OF WAREHOUSE LAYOUT DESIGN
Use one-story
facilities
Move goods in a
straight line
Use efficient
materials-handling
equipment
Use an effective
storage plan
Minimize aisle space
Use maximum height
of the building
DESIGN CONSIDERATION
Ideal Facility for Pure Supplier
Consolidation
(Full Pallet Movement)
Warehouse Space
Requirements
Cube utilization and accessibility
• Goods stored not just on the floor, but in the cubic
space of the warehouse; warehouse capacity
depends on how high goods can be stored
• Accessibility means being able to get at the goods
wanted with a minimum amount of work
Cube utilization and accessibility continued…
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Height utilization
•Regardless of facility size, the design should maximize the usage of the available cubic space by allowing for the greatest use of height on each floor.
•Most warehouses have 20- to 30-feet ceilings (1 foot = 12 inch; 1 inch = 2.54 cm), although modern automated and high-rise facilities can effectively use ceiling heights up to 100 feet.
•Through the use of racking or other hardware, it should be possible to store products up to the building's ceiling.
•Maximum effective warehouse height is limited by the safe lifting capabilities of material-handling equipment, such as forklifts.
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Storage Plan
•According to the third principle, a warehouse design should consider product characteristics, particularly those pertaining to volume, weight, and storage.
•Product volume is the major concern when defining a warehouse storage plan.
•High-volume sales or throughput product should be stored in a location that minimizes the distance it is moved, such as near primary aisles and in low storage racks.
•Such a location minimizes travel distance and the need for extended lifting.
•Conversely, low-volume product can be assigned locations that
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A Sample Storage Area
Thank You!!