Generated with sparks and insights from 50 sources

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Introduction

  • Inventory Cycle Time: The time it takes to produce and deliver an order from a customer, usually measured in days. It includes the entire process from order placement to delivery.

  • Lead Time: The period between when a company places an order for raw materials and when those materials are received. It is a crucial component of inventory management.

  • Just-in-Time (JIT) Inventory: A management strategy where materials are ordered and received only as they are needed in the production process, minimizing inventory holding costs.

  • Inventory Days of Supply: An efficiency ratio that measures the average number of days that inventory is held before it is sold or used in production.

Inventory Cycle Time [1]

  • Definition: The total time required to produce and deliver an order from a customer.

  • Components: Includes ordering phase, production phase, and delivery phase.

  • Measurement: For manufacturers, it is the average time between two orders shipped. For retailers, it is the time between receiving products from a supplier to selling them.

  • Importance: Helps in reducing inventory waste, preventing out-of-stock situations, and decreasing storage and delivery costs.

  • Optimization: Can be optimized by improving production scheduling and inventory control.

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Lead Time [2]

  • Definition: The time between placing an order for raw materials and receiving them.

  • Components: Includes supply delay and reordering delay.

  • Calculation: Lead Time (LT) = Supply Delay (SD) + Reordering Delay (RD).

  • Impact: Affects the ability to meet production schedules and customer demand.

  • Reduction: Can be reduced by improving supplier relationships, increasing order frequency, and using faster shipping methods.

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Just-in-Time Inventory [3]

  • Definition: An inventory management strategy where materials are ordered and received only as needed.

  • Objective: To minimize inventory holding costs and increase inventory turnover.

  • Implementation: Requires close coordination with suppliers to ensure timely delivery of materials.

  • Benefits: Reduces storage costs, minimizes waste, and improves cash flow.

  • Challenges: Requires accurate demand forecasting and reliable suppliers.

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Inventory Days of Supply [1]

  • Definition: An efficiency ratio measuring the average number of days inventory is held before being sold or used.

  • Components: Includes raw materials, work in process, partially finished goods, and fully finished goods.

  • Importance: Helps in understanding inventory turnover and managing stock levels.

  • Calculation: Can be calculated for different types of inventory to optimize stock management.

  • Impact: Affects storage costs, cash flow, and the ability to meet customer demand.

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Factors Affecting Inventory Time [1]

  • Lead Time: The period between placing an order and receiving it.

  • Availability: Demand for products can impact inventory cycle time management.

  • Order Costs: Costs associated with purchasing and storing inventory.

  • Product Price: Changes in product price can affect inventory management.

  • Production Scheduling: Efficient scheduling can reduce cycle times and improve inventory management.

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Reducing Inventory Cycle Time [1]

  • Utilize Automation: Improves accuracy and reduces labor costs.

  • Reduce Wait Time: Ensures production schedules are met and materials are on-hand.

  • Improve Scheduling: Identifies potential issues and optimizes operations.

  • Perform Tasks in Parallel: Reduces cycle times by running multiple tasks simultaneously.

  • Employee Contribution: Involves employees in generating ideas for improvements.

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Related Videos

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<div class="-md-ext-youtube-widget"> { "title": "What is Just-in-Time (JIT) Inventory?", "link": "https://www.youtube.com/watch?v=rXY-MNe09x4", "channel": { "name": ""}, "published_date": "Feb 2, 2023", "length": "" }</div>

<div class="-md-ext-youtube-widget"> { "title": "What is Just-in-Time (JIT) Inventory Management?", "link": "https://www.youtube.com/watch?v=zCTmN17ZDek", "channel": { "name": ""}, "published_date": "Jul 9, 2021", "length": "" }</div>

<div class="-md-ext-youtube-widget"> { "title": "What is "Just in Time"? - Whiteboard Wednesday", "link": "https://www.youtube.com/watch?v=6s4mppHXXx0", "channel": { "name": ""}, "published_date": "Aug 12, 2015", "length": "" }</div>