Inventory Management and Procurement

Course ID
MNG 320
MNG 250 Introduction to LSCM OR permission of Instructors

In today’s business environment, a company is facing increased competitions, smarter and more demanding customers, less brand loyalties, and shorter product life cycles. In this competitive business environment, the creation of customer value is a key driver of competitive advantage, and this customer value should be ultimately measurable in price, quality, and time in providing products and services to customers.

At the enterprise level, the design of value chain is intimately linked with the management of operations and supply chains. Operations are the sequence of value-adding processes that manufacture goods or provide services. Operations activities, including production, are core activities of most business organizations. Very often, the operations and production activities of an organization are directly impacted by procurement and inventory management functions. Inputs to the transformation processes, also known as production processes, can be quite complex, but generally they fall into Capital Resources, Material Resources, Human Resources, and Information Resources. Products are direct outputs of the transformation processes. These may consist of manufactured goods or services, or combinations of goods and services. Value added is the difference between the cost of inputs and the price or value of outputs.

As these transformation processes creating customer value are significantly impacted by the procurement function providing capital and material resources and the inventory management function influencing procurement and production schedule, Module 2 will look into 1st half of the transformation process, procuring and supplying raw material and managing work in process and finish product inventory.

This course has three units covering procurement, business analytical approach, and inventory management. An introduction to business analytical approach will include mathematical modeling for decision making, probability and statistics, and demand forecasting. Students also will be introduced to the role of optimization-based design tools, which use probability distributions and some optimization techniques from mathematical programming and operations research. In the latter part of the course, students will have a chance to operate a software package simulating risk pooling for inventory management to improve the system level inventory management performance.

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