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Inventory Management Explained: A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems., by David J. Piasecki
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Inventory Management isn't easy. If it were, more companies would be good at it. But being competent at managing your inventory isn't all that difficult either. It just requires that you invest the time to develop an understanding of the factors that should be affecting your inventory management decisions. Then use this understanding to start to put together the calculations and decision logic you will use to manage your inventory.
Explained. Calculations for forecasting, lot sizing, and safety stock are well known to the inventory management community, but are generally not understood to the level necessary to effectively use them. This lack of understanding results in incomplete calculations, incorrect inputs, flawed logic, or a fall-back to less effective, keep-it-simple approaches.
Inventory Management Explained helps readers build a solid understanding of the key planning aspects of inventory management. It does this by clearly explaining what inventory management is, but then goes well beyond typical inventory management books by tearing apart the calculations and logic we use in inventory management and exposing the hidden (or not so hidden) flaws and limitations. It then builds on this by showing readers how they can use their understanding of inventory management and their specific business needs to modify these calculations or develop their own calculations to more effectively manage their inventory. The emphasis on practical solutions means readers can actually use what they've learned.
For those new to inventory management, the author includes highly detailed explanations and numerous examples. Instead of archaic mathematical syntax, the author explains the calculations in plain English and uses Excel formulas and spreadsheet examples for many of them.
For the experienced practitioner, the author provides insights and a level of detail they likely have not previously experienced. Overall, Inventory Management Explained does actually explain inventory management, and in doing so, exposes the good, the bad, and the ugly aspects of it. But more importantly, it leaves the readers knowing enough to be able to start making smart decisions about how they manage their inventory.
Topics covered include:
- History-based forecasting methods including Exponential Smoothing, Adaptive Smoothing, Moving Average, and Weighted Moving Average.
- Seasonality Indexes , Trend Adjustments, and Forecast Overrides.
- Excel's Regression Analysis tool, Forecast Function, and Solver Add-in.
- Why Keep-it-simple methods for calculating safety stock don't work.
- The Normal Distribution model and why it applies to safety stock calculations.
- How to modify your safety stock calculation to account for your forecast, lead time, and order cycles.
- What EOQ is, where it came from, and what all the numbers mean.
- What goes into Order Cost and Carrying Cost.
- Setting up an order quantity calculation in Excel that takes into account Quantity Discounts.
- Dealing with seasonality and trend in your order quantity calculations.
- Periodic Review, Fixed Order Point, Min-Max, Multi-bin, Kanban, and ordering systems that directly utilize your forecast.
- The real difference between Push Systems and Pull Systems.
- Materials Requirements Planning (MRP) and Distribution Requirements Planning (DRP)
- Gross Requirements, Net Requirements, Planned Orders, Bills of Materials, Routings, Master Production Scheduling (MPS)
- How to put together an effective Fair-Share Distribution system.
- Fill Rates, On-Time Delivery, ABC stratification, Out-of-stock analysis, Excess and Obsolete inventory.
- Sales Rank: #209946 in Books
- Brand: Brand: Ops Publishing
- Published on: 2009-03-01
- Dimensions: 9.30" h x 1.00" w x 6.10" l,
- Binding: Hardcover
- 352 pages
- Used Book in Good Condition
Most helpful customer reviews
24 of 24 people found the following review helpful.
Excellent guide to inventory demand management
By David M. Weigel
I'm a software engineer who works on asset and inventory systems all day, and I've been doing it forever. Our products have always had inventory forecasting and ordering abilities (and they work!), but I've never really understood how they do what they do. I've seen webpages and such with formulas but without enough context to explain why the formulas are what they are. David Piasecki gives an excellent description of all of the elements in the excruciating detail that they deserve. (The chapter on a single variable, safety stock, runs 31 pages!)
He writes a a happy, occasionally silly style which makes it a good bedtime read. (Really, I did.) A minor complaint is that sometimes he gets too flip, tossing out irrelevant messages that detract from his point, such as when he confesses not knowing much about statistics in a book full of them. Still, they're not bad detours, and a book that should be tedious and ponderous is... can I say it... fun?
8 of 8 people found the following review helpful.
Good Introductory Book
By Guy
This is a really good book to read to begin opening up your mind to the complexities of inventory management. However, the author does tend to go on tangents and give examples of what not to do first and then what you probably/maybe/should/could be doing after. I found this style of presenting the topics confusing at times. Not that I was expecting or hoping for the book to be too authoritative, since there are certainly endless nuances to inventory management based on countless factors. However, it would have been nice if the book could have been a little bit more concise with clearer examples. Essentially, I wish this book had fewer comedic antidotes and better detailed formulas (excel ones especially). I didn't purchase this book to be entertained, I purchased it because I wanted to learn.
Also, if you like to highlight the pages are very thin and the ink tends to be bleed through.
7 of 8 people found the following review helpful.
One of two books on my shelf with NO dust on it!
By milohoy
I bought this book three years ago when I moved into a supply leadership role at my company. One of the first things I did moving to a new division was implement a statistical safety stock model and process. Although the calculation we ultimately settled on was different, we used the methodology described in his book as our base. Same is true when we started building EOQ's into certain raw material product categories. As my team grew and competencies were added (Purchasing, Production Planning, Demand Planning/Forecasting), I found myself coming back to this book time and again. I like to make decisions defensible based on data and Piasecki helped me organize my thoughts and direct my team on organizing the data to build a business case for change. The logic is sound and well organized; I pull this book down off the shelf often to remind me HOW to explain these ideas to others.
If my 5 stars weren't enough to convince you to add this to your bookshelf, consider this... I gave this book 5 stars when I live in MN and the author in WI! Think about it... :-)
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