Inventory Measures

Required growth elements, like N, have uneven distributions in the open sea, both in time and in space. Consequently, inventory measurements should ideally integrate over these expected spatial and temporal variations, but this is not usually feasible in most expeditionary style investigations. Remote sensing of selected N species (e.g., NOs ) would be highly desirable and is now possible using novel mooring-based instrumentation (Johnson and Coletti, 2002 Johnson et al., 2007). 

Number of stock outs Evaluates the MRO inventory/materials management process capability to have the on-hand quantities needed for stock items that are normally stocked in the maintenance storeroom. Provides an excellent countermeasure to ensure planned inventory reduction goal is not detrimental to storeroom customer service. Does not measure nonstock items that require requisitioning/purchasing as direct purchases or availability of project-related items. Percent inventory accuracy Maintains accurate fiscal accountability of stocked items to ensure total confidence in current inventory levels and dollar value of MRO inventories. Measures the effectiveness of the cycle-counting process and storeroom control. 

Imbalances betweenmass sources and sinks are generally related to net inventory measures such as tank or vessel levels and... 

Inventory is often used as an internal performance measure, for example, in just-in-time (JIT) production, because inventory measures how effectively waste has been reduced in the process. In a JIT system, the level or amount of inventory serves as a thermometer of the waste in the system. If quality is... 

The shop floor measures of throughput, inventory, and operating expenses can be translated into profit, return on investment, and cash flow and vice versa. Consider an example where Throughput (T) equals 1,000 and Operating Expenses (OE), Cost of Materials, and Inventory are equal to 500, 1,000, and 2,000, respectively. Since T = Sales Revenue - Raw Materials Cost, the Sales Revenue for the period being considered is 2,000 (i.e., Sales Revenue = T + Raw Materials Cost). The profit is T - OE, so the profit is 1,000 - 500 = 500. The Return on Investment (ROI) is 500/ 2,000 which equals 25%. (Remember, the inventory measure is the value of all non-depreciated assets including material). 

Unfortunately, Merisel was data-poor when it came to inventory measures — especially at the buyer level. We had to make do with what our inventory analyst could generate through ad hoc reports. We finally settled on tracking the buyer metrics shown in the following table on a weekly basis ... 

When starting flow to a tank, operators should ensure that the valves in the rundown header are properly oriented and that those leading to the tank in question are fully opened. They should also record the amount of chlorine already in the tank. As noted in Section 9.1.8.5, weighing the tank is the preferred method of inventory measurement. 

Figure 7.7 Inventory measurement, (a) Electromechanical (i>) sonar type.

We will demonstrate in this section that improvement in some selected supply chain metrics also results in improvements in some important financial metrics of the firm, which should, of course, be closely correlated with its overall business performance. To illustrate this relationship, let us consider several interrelated inventory measures—inventory turns, days of inventory, and inventory capital— and how they affect some important financial measures—return on assets, working capital, and cash-to-cash cycle. 

Using Equations 1.1 through 1.4, we can state that increasing the inventory turns will impact the other inventory measures as follows (assuming the same annual demand) ... 

Impacts on other inventory measures under option 2 1. Time between orders... 

To examine the impact of this strategy on DataStream, derive the expressions for the following inventory measures ... 

STEAM GENERATOR STAFF ACTIONS—REACTOR VESSEL INVENTORY MEASUREMENT... 

Inman (2014) mentioned that the performance measurement can be divided into two types performance on achievement and productivity on output or outcomes, such as competitiveness and financial performance, and measurement operations to focus on the factors of achievement including quality and flexibility, resource utilization, and innovation. The basic performance measurements of the business process consist of currency (from profits), productive relationships output/input or productivity to cater to the customer, innovation and adaptation to change, and human resources, with standard indicators in performance measurement which were productivity measures, quality measures, inventory measures, and lead time measures. 

Chapter 19 is our measurement chapter, but as each chapter is designed to stand alone inventory measurements are discussed here. Performance measures are needed to drive continuous improvement, if we do not know how well we are performing, if we do not have measurements, how can we know if we have improved, in terms of client satisfaction, stock outs and stock turns. Measurement is also necessary to set directions and targets for the future. The criteria for performance measures should cover a balanced approach to aU key parameters of the supply chain and should provide operational measures rather than purely financial measures. Measures should be simple, easy to define and easy to monitor. In determining what should be measured it is useful to get away from standard accounting measures. Supply chain management requirements are different from those of the accountants. In determining our own measurements we should ask ... 

Average inventory measures the average amount of inventory carried. Average inventory should be measured in units, days of demand, and financial value. 

Average replenishment batch size measures the average amount in each replenishment order. The batch size should be measured by SKU in terms of both units and days of demand. It can be estimated by averaging over time the difference between the maximum and the minimum inventory (measured in each replenishment cycle) on hand. 

Seasonal inventory measures the amount by which the inflow of product exceeds its sales (beyond cycle and safety inventory). Seasonal inventory is built up solely to deal with anticipated spikes in demand. 

Obsolete inventory measures the fraction of inventory older than a specified obsolescence date. 

If demand at Best Buy increases to 4,000 compnters a month (demand has increased by a factor of 4), the EOQ formula shows that the optimal lot size doubles and the number of orders placed per year also doubles. In contrast, average flow time decreases by a factor of 2. In other words, as demand increases, cycle inventory measured in terms of days (or months) of demand should reduce if the lot-sizing decision is made optimally. This observation can be stated as the following Key Point ... 

As demand at the supermarket chain in Question 1 grows, how would you expect the cycle inventory measured in days of inventory to change Explain. 

A hybrid inventory measurement system (HIMS) combines mass- and volume-based inventory systems, improving the reliability and reducing uncertainties of... 

Hydrostatic tank gauging. Hydrostatic tank gauging (HTG) is one of the oldest techniques to measure the tank contents. In the process industry, level measurement using differential pressure transmitters is very common. Normally this method uses analog pressure transmitters, with a 1 percent accuracy. Inventory measurement requires a much better accuraty therefore, analog transmitters are not suitable for this purpose. 

Hybrid inventory measurement system. The hybrid inventory measurement system (HIMS) combines the most modern level gauging techniques with hydrostatic tank gauging (Figs. T-13 and T-14). It utilizes an advanced radar or servo level gauge for accurate level measurement, with a smart pressure transmitter (PI) and a temperature measurement instrument. On nonatmospheric tanks a second transmitter for the vapor pressure compensation is required. 

Radar gauges. Radar gauges play an important role in tank gauging (Figs. T-23 and T-24). Their nonintrusive solid-state natiure makes them very attractive. The accuracy of the newest generation radar gauge meets all requirements for custody transfer and legal inventory measurements. 

Hybrid inventory measurement system. HIMS are also based on the integration of smart pressure transmitters. Modem level gauges, either servo or radar, provide the possibility for direct interfacing to smart pressure transmitters. HEMS opens the ideal route to total tank inventory systems, measuring all tank parameters via... 

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