Inventory Management: ABC Distribution & Stock Control
ABC Distribution and Inventory Management
ABC Distribution: Based on a study, each data set is a grouped phenomenon where a few elements generate the highest percentage of results, while many elements contribute only a small percentage. In spare parts inventory, approximately 10% of products generate 70% of sales, 20% produce 20% of sales, and 70% generate 10% of sales.
Applications of Pareto Analysis in Inventory
Pareto analysis has several applications for stores, including:
- Determining which inventory items require more attention or tighter stock control based on sales volume.
- Improving product placement for better sales.
- Identifying opportunities for cost savings through supplier optimization (UABC SBER).
- Establishing customer discount policies based on consumption patterns.
Consumption Prevention Techniques
Please note mobile trends. Calculating averages over time (month, year) using a series of previous values provides more uniform lines that indicate demand trends. The formula is: Mem = (V1 + V2) / N. Studying these averages helps detect market trends for different periods. Implementing and using these means allows us to estimate future sales (1).
Supply System
Objective: To maintain stock levels at a preset value and keep stock costs as low as possible.
Systems:
- Newspaper (Periodic) System: Determine the frequency between orders and set a fixed order quantity.
- Reorder Point System: Determine the order quantity at the lowest cost and set a reorder point (PDID) to trigger an order when inventory reaches that level.
- Mixed System: Given the complexity, a simpler system with fixed provisioning periods is used, determining the quantity to order based on a maximum stock level and available inventory.
Stock Levels
Maneuver Stock: This is the stock used to cover typical sales, calculated from sales volume during the period between orders (2).
Minimum Stock: The stock kept in anticipation of demand changes to avoid stockouts. It’s estimated at around 30-50% of the maneuver stock (3) or using statistical methods (4).
Upper Stock: The maximum amount of stock held (5).
Ordering Point Stock: The level set to trigger an order in a periodic system, adjusted to market changes (6).
Available Stock: The amount of inventory available when ordering.
Quantity to Order: The order quantity needed to replenish the stock spent (7).
Inventory Verification
Verifying the quantity of each item (c/ reference) and establishing its economic value. The formula is: Starting Stock + Ending Stock = Inputs – Outputs.
Inventory Methods:
- Traditional Inventory: Closing the store and counting items once a year.
- Daily Inventory: Counting one or more references daily for a period. After the inventory, adjust the theoretical stock with the management program. This is amnesty.
Criteria to Determine the Economic Value of Stock
- FIFO (First-In, First-Out): The cost of the first sale corresponds to the cost of the first units purchased.
- LIFO (Last-In, First-Out): Similar to FIFO, but in reverse order.
- Cost Criterion: Using the last input value or an estimated value.
- Average Price Criterion: Obtaining the weighted average price per item. When a new purchase delivery note is entered, the average price is automatically recalculated using the formula (8).