Essentials of Inventory Management

 Essentials of Inventory Management

Author: Max Muller
Pub Date: April 2011
Print Edition: $39.95
Print ISBN: 9780814416556
Page Count: 272
Format: Hardback
Edition: Second Edition
e-Book ISBN: 9780814416563

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Excerpt

Introduction to the Second Edition

When I wrote the first edition of Essentials of Inventory Management

my objective was to present, in accessible language supported

by copious illustrations and examples, timeless inventory

management concepts and techniques. My purpose was to give the

reader a fundamental understanding of inventory as it exists in the

physical world (shelf count), and as an intangible item (record

count) existing in a computer database and/or on paper.

The basic principles covered in that edition are as relevant today,

even with the explosion of Internet-based e-commerce solutions to

many inventory and materials management issues, as when they

were first written.

I am pleased to note that the book was successful. It has been

translated into Spanish, with distribution in a number of Spanishspeaking

countries, and, an English-language soft cover edition is

being distributed in India, Pakistan, Sri Lanka, Nepal, and

Bangladesh. AMACOM Books and I have received excellent responses

to the first edition from individuals just beginning their careers

in fields related to inventory management, as well as from

experienced materials managers who reported that the book reminded

them of effective techniques they had known but had forgotten

over the years.

Over the past several years, as I have continued to lecture and

consult, it became apparent that the book could be enhanced by

adding chapters and sections on subjects such as cycle counting,

enterprise resource planning, and supply chain management. And

so, this second edition was born.

The second edition retains the timeless, essential inventory

management basics that are the hallmarks of the first edition, with

new and expanded information that includes:

Introduction to the second edition

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xi

 An expansion of Chapter 2, “Inventory as Money,” to

include a section dealing with profit margins and

merchandising metrics and containing both examples

and formulae related to merchandising.

 A renamed Chapter 4, “Automated Inventory

Identification Systems,” with new material on Radio

Frequency Identification Systems (RFID) that discusses

the strengths and challenges associated with this

technology.

 New coverage in Chapter 5, “Planning and

Replenishment Concepts,” of the benefits of enterprise

resource planning (ERP), including the five main reasons

why an enterprise should consider incorporating this

concept into its organization.

 A revised and expanded Chapter 6, “Why Inventory

Systems Fail and How to Fix Them,” which includes new

material regarding how to distinguish A-B-C cycle

counting analysis using a single factor from approaches

combining multiple factors (e.g., dollar value and usage

rate). The chapter now explains in detail how to

undertake an A-B-C cycle counting analysis by

combining multiple factors.

 A new Chapter 7, “Basics of Supply Chain Risk

Management,” reveals how the very techniques that have

allowed American businesses to slash operating costs and

inventories by embracing just-in-time and lean

manufacturing techniques have made them vulnerable to

a number of serious supply chain risks. It offers

suggestions regarding steps organizations should take in

trying to balance the risks and rewards of SCM, and

xii Introduction to the second edition

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xii

provides a starting point to any supply chain risk

management effort.

And, of course, as it has since the first edition, the book introduces

the new stockroom/warehouse manager, the nonfinancial

inventory control individual, and the small business owner to the

fundamental nature of inventory from financial, physical, forecasting,

and operational standpoints. In addition, it explains in easily

understandable terms the concepts underlying automated identification

of product through both bar coding and RFID.

The ultimate goal of this book is to present immediately usable

information in the areas of forecasting, physical control and layout,

problem recognition, and resolution, as well as how to begin to better

manage a supply chain.

Ultimately, Essentials of Inventory Management will enable you

to:

 Understand that modern practice discourages holding

large quantities of inventory and encourages only having

amounts on hand required for current needs.

 Grasp the signific ance of controlling actual, on-hand

inventory as both a physical object (shelf count) and as

an intangible object (record count and monetary worth).

 Appreciate the fundamental differences between finished

goods inventories in the retail/distribution sectors and

raw materials and work-in-process inventories found in

the manufacturing environment.

 Apply basic formulae to calculating inventory quantities.

 Utilize basic formulae to compute breakeven points,

profit margins, markups and markdowns, as well as

selling price and margin percentages.

Introduction to the second edition xiii

FM-Essential Inventory Mgmt 12/6/10 12:55 PM Page xiii

 Select the cycle counting inventory method that is right

for you.

 Undertake an A-B-C cycle counting analysis by

combining multiple factors.

 Recognize and analyze dysfunctions within your own

operation.

 Employ basic problem-solving techniques to issue

resolution.

 Control the physical location of inventory in a more

efficient manner.

 Analyze whether or not RFID is right for your

organization.

 Be aware of supply chain management risks and possible

solutions.

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