part iii information for inventory management

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Part III

Information for

Inventory Management

Chapter 6

Sources of Information

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Aims of the Chapter

After reading this chapter you should be able to do the following:

• discuss the information needed for inventory management;

• outline the design of an inventory management information

system;

• consider the information supplied by accounting;

• do an ABC analysis of stock;

• describe the function of procurement and its role in inventory

management;

• outline the impact of e-commerce;

• discuss the role of warehousing;

• describe important factors in the design of a warehouse.

Inventory Management Information

Systems: Types of Information

Inventory managers need a huge amount of information:

• the items, their specification and use,

• business plans and strategies,

• suppliers, customers,

• promotions, storage requirements, constraints,

• prevailing conditions of trade, contract law,

• transport arrangements, competitors,

• Business environment, changing conditions,

• international trade, special requirements, and so on.

This information is collected from many sources, and is

presented by the organization’s management information

system (MIS).

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Systems (MIS)

• The MIS controls the flow of information throughout an

organization, and makes sure that everyone has the information

they need to work properly.

• It collects, checks, organizes, stores, analyses and presents

information in the most appropriate formats to everyone who

needs it.

• Sometimes it is convenient to refer to an inventory management

information system which consists of all the parts of an MIS that

are specifically concerned with inventory management.

• This collects information from both within the organization and

from external sources and presents it to inventory managers.



• Business environment, which gives the overall context for

stocks: the state of competition, changing circumstances,

likely shortages or supply difficulties, state of the economy,

government policies and legislation, inflation, exchange

rates, tariffs, duties, taxes and quotas, and a range of other

external factors that might affect stocks.

• Organizational strategies, which are the internal policies that

show what the organization is doing in the long term and the

support needed from inventory management: details of

objectives, planned operations and products, priorities,

financing arrangements, trading relationship, and a range of

other internal factors that might affect stocks.

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• Performance targets, which identify the factors that are

important to the organization – and consequently to

inventory management – and the levels of performance to be

achieved: aims for customer service, productivity, stock

turnover, return on inventory investment, overall investment

in stock, improvements, balance between competing

objectives, etc.

• Plans for operations and production. material requirements,

new products, changes to existing products, promotions,

size of demands, etc.



• Costs. Our independent demand inventory models are based

on reliable figures for the four cost components of unit,

reordering, holding and shortage. Managers need detailed

breakdowns of other relevant costs, such as opportunity

costs, financial charges, transport, storage, packaging,

handling, insurance, obsolescence, internal movement,

delays, distribution, etc.

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• Customer information. Inventory managers pass materials to

customers (either internal or external). alliances, trading

arrangements, identification of existing and new customers,

contact details, salespeople used, locations, products

demanded, size of orders, regular orders, preferred delivery

modes, purchases from competitors, sensitivity to prices,

returns, complaints, attitude towards shortages, back-orders,

service level and lead times demanded, stocks held,

purchasing system used, attitudes towards shared systems

and integration, trading history, payment method, financial

security, credit terms requested, etc.



• Demand patterns. To have enough stock to meet likely patterns of

future demand, we need forecasts for each period, complete

histories of past demand, changing patterns over time, reasons

for changes, amount of variation and uncertainty, factors that

affect demand, special promotions and marketing campaigns,

regular orders, advance sales, etc.

• Supplier information, which gives all relevant information about

the supply of materials, including preferred suppliers, alliances

and other trading arrangements, attitude towards shared systems

and integration, locations, products supplied, quality, purchasing

system used, lead times, reliability, trading history, financial

security, alternative suppliers, process and purchase conditions,

credit terms offered, attitude towards returns, payment method,

etc.

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• Product details, which identify the exact item and include

identification codes, description, design features and

specifications, limitations, unit prices, discounts available,

special conditions for storage or supply, quality available,

weight and size, packaging, available suppliers, order

restrictions, relative make/buy costs, and alternative

products.

• Warehousing information, which shows where stocks are

held, including locations, stock levels in each location, space

available, facilities and conditions, material handling

equipment, security, ownership, restricted access, costs and

performance.



• Transport, including the types of transport available, types of

vehicle, special requirements and facilities, access, speed of

delivery, scheduled services and frequency, reliability, costs,

capacities, back-hauls and reverse logistics.

• Stock information. This gives the details of all current stocks

held: identification codes, current holdings, locations,

inventory policies, reorder levels and quantities, deliveries

due, suppliers, quality, costs, units reserved for known

orders, allowed variation in stock, maximum and minimum

levels, age of units, obsolescent and slow moving items,

insurance, special conditions, allocation of stocks to orders,

back-orders, etc.

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• Orders outstanding, which are all the orders with deliveries

expected in the near future, details of materials in transit

(coming from suppliers, going to customers, or moving

between facilities), routes, transport operators, current

locations, quantities, due dates, reliability, special handling

required, potential difficulties, back-orders, urgent deliveries,

etc.



• Orders outstanding, which are all the orders with deliveries

expected in the near future, details of materials in transit

(coming from suppliers, going to customers, or moving

between facilities), routes, transport operators, current

locations, quantities, due dates, reliability, special handling

required, potential difficulties, back-orders, urgent deliveries,

etc.

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Systems: Transaction Recording

• Inventory MIS has to track every detail of stock movement,

from orders sent to suppliers, through to payments received,

for finished products delivered to customers.

• A typical transaction recording system might do the

following:

– maintain accurate records of current stocks, customers,

suppliers, etc.;

– update these records after each order, delivery,

withdrawal or other transaction;

– check and validate all data used by the system.

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The information can be passed to the inventory control system,

for example, to do the following:• calculate variables, including forecasts of demand and lead time,

reorder levels, order quantities, costs, etc.;

• prepare and transmit orders when stocks fall to reorder levels;

• monitor order progress, with follow-up and expediting of overdue

orders;

• check orders, credit and payment facilities of customers;

• check deliveries, clear of invoices from suppliers and arrange

payment;

• report exceptional circumstances that need management attention;

• summarize data in management reports;

• update all parameters used by the system.

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• The information flow through an organization is usually

separated from the material flow.

• The two are obviously connected, but managers have to

control operations and check that the transactions reported

actually happen.

• One facet of these checks are periodic, manual counts of

stock – called stocktaking – to find differences between

recorded and actual stock levels.



There are several reasons why actual stock may differ from

recorded stock:• records may not have been updated with recent transactions;

• stock is mislaid (particularly when an item is kept in several

locations) and will turn up later;

• emergency or hurried withdrawals from stock may incur errors or

not be recorded;

• deliveries or withdrawals are recorded more than once by mistake;

• cancelled orders or withdrawals are not recorded;

• poor quality and returned items (either from customers or to

suppliers) are not recorded;

• stock become obsolete and is discarded;

• stock is stolen, damaged or deteriorates while in store.

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• There are several ways of encouraging this, and perhaps the most

important is to restrict access to stores.

• Since stocktaking is an expensive and inconvenient, some only do

one check at the end of the financial year.

• A more useful approach uses cycle-counting, where stock is

checked at regular intervals. Typically, a small proportion of items

is checked every week, with high usage items checked every

month and less widely used items every three months.

• Checks may be triggered by specific conditions such as a reported

discrepancy in stock, an item with zero or low stock, an item with

very high stock, a back-order placed for an item that is recorded as

being in stock, or a period with no recorded demand.

• One common suggestion is that important items should have

discrepancies of less than 0.2% in stock levels, others 1%.

Information from Accounting

• Accountants supply data about the four cost components –

unit, reorder, holding and shortage costs.

• They also provide more detailed costs information and a lot of

transactional data. This information appears in records of

individual transactions, and is also summarized in the

organization’s accounts.

• 𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜fi𝑡 = 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑠𝑜𝑙𝑑• 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑠𝑜𝑙𝑑 = 𝑜𝑝𝑒𝑛𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘 + 𝑛𝑒𝑡 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 −

𝑐𝑙𝑜𝑠𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘

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Opening stock £ 2,500.00 Sales £ 22,100.00

Purchases £ 13,000.00 less returns £ 600.00

Less returns £ 500.00 Net sales £ 21,500.00

Net purchases £ 12,500.00

Total stock £ 15,000.00

Less closing stock £ 3,000.00

Cost of products sold £ 12,000.00

Gross Profit £ 9,500.00

£ 21,500.00 £ 21,500.00


Raw materalsOpening stock of raw materials $ 60,000 Purchase $ 225,000

returns and allowances $ 10,500 purchase discount $ 4,500 $ 15,000

Net purchase $ 210,000 Inward transport $ 15,000 Cost of material purchased $ 225,000 Cost of material available $ 285,000 Closing stock of raw materials $ 105,000 Cost of raw material used $ 180,000

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Work in progressRaw materals used $ 180,000 Staff $ 390,000 Overheads $ 125,000 Total cost of operations $ 695,000 Opening stock of work in progress $ 45,000 Total work in progress $ 740,000 Closing stock of work in progress $ 75,000 Total cost of production $ 665,000

Finished goodsOpening stock of finished goods $ 135,000 Cost of production $ 665,000 Products available for sale $ 800,000 Closing stock of finished goods $ 180,000 Total cost of products sold $ 620,000

Information from Accounting:

Value of Stock

• An obvious problem with accounting information is that it

depends on the conventions used.

• The usual practice is to value stock at the lesser of unit cost

or realizable value.

• 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑠𝑡𝑜𝑐𝑘 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑖𝑛 𝑠𝑡𝑜𝑐𝑘 × 𝑢𝑛𝑖𝑡 𝑣𝑎𝑙𝑢𝑒– We can avoid the problem of variable stock levels by counting the

number of units held at a specific time, usually the end of the

financial year.

– If there are enough items in the stock, this gives a

reasonable overall average (providing the demands for

items are more or less independent, and do not all follow

the same strongly seasonal variation).

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Value of Stock

• The other problem is variable unit cost.

• There are four main options for dealing with this:– Actual cost identifies each unit in stock with the price actually

paid for it.

– First-In-First-Out (FIFO) This assumes that the first units

arriving in stock are the first sold, so the value of remaining

stock is set by the amount paid for the last units bought.

– Last-In-First-Out (LIFO) assumes that the latest units added to

stock are used first, so the value of remaining stock is set by the

amount paid for the earliest units bought.

– Weighted average cost finds the average unit cost over a typical

period from: 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑜𝑠𝑡 =𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑏𝑜𝑢𝑔ℎ𝑡


Value of Stock

• The method chosen should give the fairest match of costs to

revenues.

• FIFO is the most widely used method, while LIFO is often

expressly prohibited, especially when it would artificially

reduce tax liabilities.

• Another consideration is that accounting conventions should

be consistent, so that organizations should not look for a

short-term gain by changing the basis of calculations.

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Worked Example #1

During her first job on a graduate trainee scheme, Madeleine Fraser

was given the following record of transactions for an item and asked

for her views on the profit. What answer could she give?

Date Purchases

number

Unit cost

(€)

Sales

number

Unit price

(€)

Opening stock 80 20

January 20 30

February 40 40

March 60 30

April 50 50

May 80 40

June 20 60

Worked Example #1

DatePurchases

numberUnit cost

SalesUnit price Inventory

Stock Value

(FIFO)

Stock Value

(LIFO)

Stock Value

(Wt. Avg.)number

Opening stock 80 € 20.00 80 € 1,600.00 € 1,600.00

January 20 € 30.00 60 € 1,200.00 € 1,200.00

February 40 € 40.00 20 € 400.00 € 400.00

March 60 € 30.00 80 € 2,200.00 € 2,200.00

April 50 € 50.00 30 € 900.00 € 700.00

May 80 € 40.00 110 € 4,100.00 € 3,900.00

June 20 € 60.00 90 € 3,500.00 € 3,100.00 € 2,700.00

Total 220 130

Total Cost € 6,600.00

Wt. Avg. € 30.00

Revenue € 5,900.00

Cost of products € 3,100.00 € 3,500.00 € 3,900.00

Gross Profit € 2,800.00 € 2,400.00 € 2,000.00

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Value of Stock

• It is often expensive, difficult or impossible to count the actual

number of units in stock.

• We can estimate the value of stock without actually counting it,

by using the gross profit as a percentage of sales.

• If we assume this remains constant from one period to the next,

we can work backwards to estimate the value of closing stocks.

• There are variations on this approach for estimating the value of

closing stock, but they all rely on conventions and assumptions

and are clearly less reliable than methods based on actual stock

counts.


Value of Stock

• It is often expensive, difficult or impossible to count the actual

number of units in stock.

• We can estimate the value of stock without actually counting it,

by using the gross profit as a percentage of sales.

• If we assume this remains constant from one period to the next,

we can work backwards to estimate the value of closing stocks.

• There are variations on this approach for estimating the value of

closing stock, but they all rely on conventions and assumptions

and are clearly less reliable than methods based on actual stock

counts.

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Worked Example #2

Last year PiHo Industries made a gross profit of 30% of sales. This

year they know that the opening stock of an item was $8,000 with

purchases of $22,000. If sales of the item were $40,000, what is the

value of closing stock?

Estimated closing stock = 30,000 – 28,000 = $2,000

Sales $ 40,000

Cost of products sold:

Opening stock $ 8,000

Purchases $ 22,000

Cost of products available $ 30,000

Estimated closing stock ???

Total cost of products sold $ 28,000

Gross Profit $ 12,000


ABC Analysis of Stocks

• The origin of the ABC analysis ( Pareto analysis, or the ‘rule of

80–20’) came in the nineteenth century when Vilfredo Pareto

found that 20% of the population owned 80% of the wealth.

• In inventory control terms it means that 20% of the inventory

items need 80% of the attention, while the remaining 80% of

items need 20% of the attention.

• In particular, ABC analyses define the following:– A items are the few most expensive ones that need special

care.

– B items are ordinary ones that need standard care.

– C items are the large number of cheap items that need little

care.

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• Typically an organization might use an automated system to deal

with all B items.

• A items are more important, and although the automated system

might make some suggestions, managers make the final decisions

after a thorough review of circumstances.

• C items are very cheap and are usually left out of the automatic

system, to be dealt with by ad hoc procedures.

• An ABC analysis starts by taking each item and multiplying the

number of units used in a year by the unit cost.

• This gives the total annual use of items in terms of value.

• Usually, a few expensive items account for a lot of use, while many

cheap ones account for little use.

• If we list the items in order of decreasing annual use by value, A

items are at the top of the list and C items are at the bottom.



• Because an item is cheap or has low demand, it does not mean

that it is not important.

• organizations need stocks of all items – including those that are

cheap or not often used – to continue their smooth operations.

• They typically hold C items in stock because they:

– are more important than their classification suggests – like

spare parts;

– allow continued sales of an old item – which may no longer be

made;

– Are associated with sales of some A items;

– give high profits in relation to their low costs;

– are new items – which have not yet established a history of use;

– are expected by customers – like ink cartridges for old printers.

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• If the three categories are not descriptive enough, managers might

add extra ones.

• A fourth category is sometimes used, where D items are used so

infrequently they are ‘dead’ and are being considered for

withdrawal.

• And sometimes a special category is used for important spare

parts or other items that have a combination of high importance

and low use.



Category % of items Cum. % % of use Cum.%

A 10 10 70 70

B 20 30 20 90

C 70 100 10 100

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Worked Example #3

A small store with 10 categories of item has the following costs and

annual demands:

Do an ABC analysis of these items. How might stocks of each

category be controlled?

Item X1 Y7 W4 X2 X3 Y9 W5 Z3 Z4 X4

Unit Cost 3 2 3 8 2 10 1 5 20 4

Weekly demand 2 25 1 30 10 10 5 2 1 3

Item X2 Y9 Y7 X3 Z4 X4 Z3 X1 W5 W4

Cum. Item # 1 2 3 4 5 6 7 8 9 10

Cum. Item % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Unit Cost 8 10 2 2 20 4 5 3 1 3

Weekly demand 30 10 25 10 1 3 2 2 5 1

Weekly use 240 100 50 20 20 12 10 6 5 3

Cum. Use 240 340 390 410 430 442 452 458 463 466

Cum. Use in % 52% 73% 84% 88% 92% 95% 97% 98% 99% 100%

Category A B B C C C C C C C

Information about Supply and Demand:

Demand Forecasting

• The pattern of demand is perhaps the most important single factor

for inventory management.

• In general, there are two sources for demand data.

• For the first, an organization supplies products directly to

customers and has historical sales figures that it can use to

forecast future demand. (Chapter 7)

• For the second, an organization supplies materials to support

internal operations and can use the planned operations to give a

timetable for demands. (Chapters 8 and 9).

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Supply and Procurement

• Procurement is responsible for acquiring all the materials needed

by an organization.

• It consists of all the related activities needed to get materials,

services and any other materials from suppliers into an

organization.

• The overall aim of procurement is to guarantee a reliable supply of

materials to an organization.


Supply and Procurement

– working closely with user departments, developing relationships and

understanding their needs;

– finding good suppliers, working closely with them and developing

beneficial relationships;

– buying the right materials and making sure that they have acceptable

quality,

– arrive at the time and place needed, and meet any other requirements;

– negotiating good prices and conditions;

– keeping stocks low, considering inventory policies, investment,

standard and readily available materials, etc.;

– moving materials quickly through the supply chain, expediting

deliveries when necessary;

– keeping abreast of conditions, including pending price rises, scarcities,

new products, etc.

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Worked Example #2

Last year Lavender Spartak Limited had total sales of $216 million.

Their direct costs were $116 million for materials, $54 million for

employees and $24 million for overheads. What is the effect of

reducing the cost of materials by 1%?

in Millions$ Original Cost reduced by 1% Change

Total sales $ 216.00 $ 216.00

Direct cost $ 116.00 $ 114.84 -1.00%

Employees $ 54.00 $ 54.00

Overhead $ 24.00 $ 24.00

Total cost $ 194.00 $ 192.84

Gross profit $ 22.00 $ 23.16 5.27%


Procedure for Procurement

• Procurement looks for two factors: materials that satisfy their

requirements; and a supplier who can guarantee to deliver

the agreed materials.

• A useful approach for choosing the best supplier has the

following steps.– Look for alternative suppliers and build a long list of qualified

suppliers who can deliver the materials.

– Compare organizations on this long list and eliminate those who

are, for any reason, less desirable. Continue eliminating

organizations until you have a shortlist of four or five of the most

promising suppliers.

– Prepare an enquiry, or request for quotation, and send it to the

shortlist.

• ž Collect the bids returned by the shortlist, do a preliminary

evaluation, and

• eliminate those with major problems.

• ž Do a technical evaluation to see if the materials meet all

specifications.

• ž Do a commercial evaluation to compare the costs and other

conditions.

• ž Arrange a pre-award meeting to discuss bids with the

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– Collect the bids returned by the shortlist, do a preliminary

evaluation, and eliminate those with major problems.

– Do a technical evaluation to see if the materials meet all

specifications.

– Do a commercial evaluation to compare the costs and other

conditions.

– Arrange a pre-award meeting to discuss bids with the remaining

suppliers.

– At this point you should have enough information to make a

final choice of supplier, so arrange a pre-commitment meeting

to sort-out any last minute details.

– Award orders to the preferred supplier.



• This procedure should give a supplier who is financially secure,

with good long-term prospects, can supply the necessary

materials, guarantees quality, is reliable, has short lead times,

quotes reasonable prices and finance arrangements, is

responsive to customers’ needs, has necessary the skills and

experience, has a good reputation, uses convenient

procurement systems – and probably has many more enviable

qualities.

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Structure of a Purchasing Cycle


Information Flows for Order Processing

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e-Procurement

Changing patterns of procurement,

• Supply chains getting shorter,

• More customers use the Web,

• Alliances are reducing the number of suppliers used by each

organization,

• Amounts purchased are increasing as companies focus on their

core activities and outsource more, and

• Customers are demanding more from products and conditions of

purchase.

• e-procurement. – Surveys (see, Cummings, 2002) suggest that over 60% of UK

companies were using e-procurement by 2002– 57% of corporate buyers have purchased goods online, and 37%

percent expect to increase the amount of their budget spent online

http://www.acquitygroup.com/News-And-Ideas/News/Study-Finds-More-Than-1-3-of-Corporate-

Buyers-Expe#sthash.n2DgDYSe.dpuf


Advantages of e-Procurement

• allowing instant access to suppliers anywhere in the world;

• creating a transparent market where product details are

readily available and easily compared;

• Allowing comparison of standard terms of trade and rapid

negotiation of details;

• automating procurement with standard procedures;

• greatly reducing the time needed for transactions;

• reducing costs, typically by 12–15%;

• allowing outsourcing of some procurement activities to

suppliers or third parties;

• integrating seamlessly with suppliers’ information systems.

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Warehousing:

Purpose of Warehouses

• A warehouse is any place for storing materials. – Different terms: distribution centres and logistics centres.

• Inventory management is the management function

associated with decisions about stock, while warehousing is

the operational function that physically looks after it.

• Main aims of a warehouse:– providing necessary storage at key points in a supply chain,

– giving secure storage of the type needed by materials,

– keeping materials in good condition with little damage or loss,

– having low costs with high productivity and utilization of

resources, and giving safe working conditions.

Warehousing:

Warehousing Activities

• receiving materials from upstream suppliers;

• identifying the materials delivered, matching them to orders

and finding their intended user;• unloading materials from delivery vehicles;

• doing necessary checks on quantity, quality and condition;

• labelling materials (usually with bar codes or magnetic stripes) so

they can be identified and monitored;

• sorting materials as needed;

• moving materials to a bulk storage area;

• holding them in stock until needed;

• when necessary, moving materials from bulk storage to a smaller

picking store;

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Warehousing:

Warehousing Activities

• picking materials from this store to meet orders;

• moving the materials to a marshalling area;

• assembling materials into orders;

• packing and packaging as necessary;

• loading delivery vehicles and dispatching the order;

• controlling all communications and related systems, such as

inventory control and finance.

Warehousing:

New Warehousing Activities

Consolidating:

• Warehouses are places where small loads from different suppliers are

combined to give full vehicle loads for delivery to customers.

• This is the basis of postponement, where the final steps of production

are left to the last possible moment.

Bulk-breaking:

• Here a supplier sends all the demand for a particular area in a single

delivery to a local warehouse. The warehouse breaks this delivery into

the separate orders and passes them on to each customer.

Cross-docking

• The arrival of materials at a warehouse is coordinated with its

departures to customers, so that they are transferred directly from the

arrival area to the loading area, and immediately sent for delivery to

downstream customers.

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Warehousing:

Warehouse Design

Essential elements in a warehouse are:

• an arrival bay, or dock, where materials coming from suppliers

are delivered, checked and sorted;

• a storage area, where materials are kept in stock;

• a departure bay, or dock, where customers’ orders are

assembled and sent out;

• a material handling system, for moving materials around;

• an information system, which records the location of all

materials, arrivals from suppliers, departures to customers, and

other relevant information.

Warehousing:

Warehouse Design

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Warehousing:

Warehouse Design

Warehousing:

Warehouse Design

Material handling equipment

1. Manual warehouses: trolley, handtrucks, and carousels – Manual warehouses only work if the items are small and light

enough to lift, with shelves that are low enough to reach and close

together to reduce walking.

2. Mechanized warehouses: reach trucks, order-picking

machines, forklift trucks, cranes, towlines, conveyors, tractors

or trains, and carousels.

3. Automated warehouses. High storage areas, AGVs, high

speed stacker cranes, robots, and a warehouse management

system to record material locations, and control all movements.

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Warehousing:

Packaging

• Collecting together materials into these standard packages is

called unitization to form unit loads.

• Packaging serves four basic functions:– identifies the product and gives basic information;

– protects items while moved through the supply chain;

– makes handling easier;

– Assists in marketing, promoting the product, advertising and

giving information to customers.

• 2 types of packaging:– the interior, or consumer packaging, is designed for the customer and

includes the marketing and promotional materials.

– the exterior, or industrial packaging, is designed to identify the

contents, give information to organizations in the supply chain, protect

the contents, and make handling easier.

part iii information for inventory management

Documents