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2. Batch size inventories – these are createdbecause the economy of themagnitude.
Because of different economic reasons it is profitable to accumulate sufficient
amounts of materials before starting the production or transportation.
3. Buffer inventories – these are maintained because of uncertainty in demand
or delivery amounts or timing. The costs of a buffer inventory are smaller
than stock-out costs.
4. Season inventories – season inventories appear when products are produced
before their demand. Regular predictable variation is typical for the demand,
for example, winter sport equipment, soft drinks, garments etc.
5. Speculative inventories – these appear when some products are bought
before expectable rise of prices or taxes etc. In this case the savings are bigger
than the inventory costs.
6. Security inventories – security inventories are created for the case of accident,
war etc. Security inventories are usually stored separately, and it cannot be
used without special permission, which can be issued in special cases only.
5.3.2 Features of the inventory system
The inventory system can be determined in several ways. All these ways have
demand, supply, limitations and costs as common factors. These factors must be known
when determining the inventory model.
Demand
The most important factors when determining the demand are magnitude, speed
(demand/time unit) and form of the demand. When the demand is equal at every
equally long time period, the demand is constant. Otherwise the demand alters.
The form of demand means how the units are taken from the inventory. Units
can be taken at the beginning or the end of the period, evenly during the period or by
some other pattern.
A significant feature of the demand is if the demand is independent or derived
(the demand is dependent on the demand of some other article. For example, it is a
component of another article).
Supply
Supplies can be graded by the size, form and delivery time. The size of the supply
means the lot size, which arrives in the inventory. It can be constant or variable.
The form of the supply tells how the supply into the inventory happens. The form is
a single supply when the batch is received at once, serial supply when the supply happens
periodically during a certain time and constant when the supply happens constantly.
The delivery time is the time period between the decision of ordering and receiving
the ordered items. It can be constant or variable.
The supply happens internally when the company produces the article itself,
external when the article is bought outside.