From the course: Supply Chain and Operations Careers: Certification Tips and Tricks

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Introduction to inventory management

Introduction to inventory management

From the course: Supply Chain and Operations Careers: Certification Tips and Tricks

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Introduction to inventory management

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Inventory is absolutely one of the most useful tools for balancing supply and demand. Managed well, inventory helps you provide better service to customers, but manage poorly, it can drain profits out of your business. So let's look at the two different roles for inventory. The first kind of inventory is cycle stock. Cycle stock helps you balance your expected supply with your expected demand. You could say it allows you to decouple supply and demand so that they can occur at different times and in different quantities. For example, you can receive a big shipment on Monday and then fill small orders on Tuesday, Wednesday, and Thursday. Or you can receive small shipments on Monday through Thursday so that you can fill a big order on Friday. That's cycle stock inventory. But there's another way to use inventory. You can treat it like an insurance policy against unexpected spikes in demand, or to protect you from delays in inbound shipments. This is called safety stock inventory. You…

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