Inventory Policy Report.

Determine the type of inventory to implement in your training project:

Our company is dedicated to the distribution of dairy products; therefore

the type of inventories we would handle would be with the supply chain
with sourcing and distribution. Production Planning, through the
Production Master Plan (P.M.P.) and the Materials Requirements Plan
(MRP) are the main activities of this process.

Production planning is related to distribution with respect to final product

inventories. Production uses inventories to make operations as uniform as
possible, and thus achieve customer satisfaction, by meeting the
requirements of customer demand.

To do this then the inventory to be managed is:

Perpetual Inventory: It is the one that is kept in continuous agreement

with the stocks in the warehouse, by means of a detailed record that can
also serve as auxiliary major, where the amounts are taken in monetary
units and the physical quantities. At short intervals, the inventory of the
different sections of the warehouse is taken and the quantities or amounts
are adjusted or both, when necessary, according to the physical account.
Perpetual records are useful for preparing the monthly financial statements,
quarterly or provisionally. The perpetual system offers a high degree of
control, because inventory records are always up-to-date. Although there
are several types of inventories such as.

Intermittent Inventory: This is an inventory that is performed several

times a year. It is used, for various reasons, can not be entered in the
accounts of the permanent accounting inventory, which is partly to
supplement.

Final Inventory: It is the one made by the merchant at the end of the
financial period, generally at the end of a period, and serves to determine a
new equity situation in that sense, after all trading in that period.

Initial Inventory: Corresponds to the one that is done when beginning the
operations.
Physical Inventory: This is the actual inventory. It is to count, weigh or
measure and write down each and every one of the different kinds of goods
(goods) that are in existence at the date of the inventory, and evaluate each
one of said items. It is performed as a detailed and valued list of stocks.

Inventory determined: by observation and checked with a count list.

Calculation of the inventory made by listing the stock actually owned. The
purpose of this inventory is to convince the auditors that the records of the
inventory faithfully represent the value of the principal asset. The
preparation of the physical inventory consists of four phases: Inventory
management (preparation), Identification, Instruction and Training.

Transit Inventory: Used to support operations to supply pipelines linking

the company to its suppliers and customers, respectively. They exist
because the material must move from one place to another. While the
inventory is on the way, it may not have a useful function for plants or
customers; it exists exclusively for the time of transport.

Inventory of Raw Material: They represent stocks of the basic materials

inputs that they open to incorporate in the manufacturing process of a
company.

Inventory in Process: These are stocks that are taken as labor, other
materials and other indirect costs are added to the raw raw material, which
will come to form either a sub-assembly or a component of a finished
product; while it does not finish its manufacturing process, must be
inventory in process.

Consignment Inventory: It is that merchandise that is delivered to be sold

but the title of ownership is kept by the seller.

Minimum Inventory: It is the minimum quantity of inventory to be kept in

the warehouse.

Available Inventory: Is one that is available for production or sale.

Online Inventory: It is the inventory that is waiting to be processed on the

production line.
Inventory Aggregate: Applies when managing the stocks of a single item
represents a high cost, to minimize the impact of cost on inventory
management, items are grouped either in families or other classification of
materials according to their Economic importance, etc.

Prevision Inventory: They are held in order to cover a perfectly defined

future need. It differs with respect to security, in that the forecast is in the
light of a need that is known with reasonable certainty and therefore,
involves a lower risk.

Inventory of Goods: They are all those goods that belong to the company
either commercial or mercantile, which buy them and then sell them
without being modified. This Account will show all the goods available for
sale.

Fluctuation Inventory: These are taken because the quantity and pace of
sales and production can not be precisely determined. These fluctuations in
demand and supply can be offset by reserve or security stocks. These
inventories exist in work centers when the workflow can not be fully
balanced. These inventories can be included in a production plan so that
production levels do not have to change to cope with random variations in
demand.

Anticipation Inventory: These are those that are established in advance of

periods of increased demand, commercial promotion programs or even
plant closure period. Basically inventories of anticipation store working
hours and machine hours for future needs and limit changes in production
rates.

Batch Inventory or Batch Size: These are inventories that are ordered in
lot size because it is more economical to do so so ask when it is necessary
to satisfy the demand. For example, it may be more economical to carry a
certain amount of inventory than to order or produce in large lots in order
to reduce costs of enrollment or order or to obtain discounts on purchased
items.

Seasonal Inventories: Inventories used for this purpose are designed to

more economically meet seasonal demand by varying production levels to
meet fluctuations in demand. These inventories are used to smooth the
production level of operations, so that workers do not have to hire or fire
often.

Intermittent Inventory: It is an inventory made with a certain time and

not in a single time at the end of the accounting period.

Permanent Inventory: Method followed in the operation of some

accounts, generally representative of stocks, whose balance must at any
time coincide with the value of stocks.

Cyclical Inventory: These are inventories that are required to support the
decision to operate according to lot sizes. This occurs when instead of
buying, producing or transporting inventories of one unit at a time, you can
decide to work in batches, in this way, inventories tend to accumulate in
different places within the system.

Set inventory policies (s) to sort, organize, schedule and transport

according to your training project

The inventory system is responsible for ordering and receiving the goods;
To coordinate the placement of the orders and follow up on it.

In addition, the system must maintain a control to answer questions such

as:

Has the supplier received the order?

Has this been dispatched?

Are the dates correct?

Are there procedures for placing a new order or returning the

undesirable merchandise?

Sales: Maximize order coverage.

Production: Maximize raw material coverage

Minimize: change overs in production lines; Flatten the production plan

and avoid spikes; Maximize the use of machinery and personnel: minimize
downtime.

Purchases: Minimize unit costs of raw material; Identify reliable suppliers.

Finance: Minimize investment in inventories: reduce financial risk .;
Maximize cash flow.

In general, it is not possible for all areas to achieve their objectives

simultaneously and the overall optimum is not the sum of the optimums per
area. That is, all functional areas must subordinate their specific indicators
to the general objectives of the business plan. This is implemented through
the inventory policy. The purposes of inventory policies should be.

1) Define the desired level of investment in inventories.

2) Keep physical inventory levels as close as possible to what is

planned.

The role of inventory control is to maintain a balance between inventory

costs and the level of service to internal and external customers. On the
other hand the control and management of the stocks of certain goods, in
which are applied methods and strategies that can make the

Tenure of these goods and at the same time serves to evaluate the
procedures of entries and exits of said products. Finally, to comply with our
deliveries, it is specified to take the products in a timely manner and to the
place where they are required. Given

Supply and distribution. Likewise, unplanned changes, evidently will cause

pressures, mismatches and waste, as well as high-cost inventory levels,
describing the transport service as poor and of poor quality. Therefore,
transport activity in the supply chain should be planned and considered in
the coordination agreements between customers and suppliers.