CHAPTER TWO

INVENTORY FUNDAMENTALS

2.1 Inventory Integrity

2.2 Inventory Philosophies

2.3 Inventory Types

2.4 Out of Stock Conditions

2.5 Planning Parameters

2.6 Financial Terms

2.7 Demand Terms

2.8 Decision Variables

2.9 Inventory Interdependencies

I rarely encounter obstacles to good inventory performance that cannot be overcome with sound fundamentals. These building blocks and intrinsic trade-offs seem to elude all but the world-class few who have recognized that breakthroughs are in the basics.

A few months ago I facilitated an inventory strategy workshop with a manufacturer of high-tech components. During the workshop they proudly presented their supply chain and inventory performance and practices. They had even set their sales and operations ...

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