The importance of inventory management, and the need for coordination of inventory decisions and transportation policies, has long been evident. Unfortunately, managing inventory in supply chains is typically difficult, and may have a significant impact on the consumer service level and supply chain system-wide cost.

A typical supply chain consists of suppliers and manufacturers, who convert raw materials into finished products, and distribution centers and warehouses, from which finished products are distributed to customers. This implies that inventory appears in the supply chain in several forms:
-raw material inventory;
- work-in-process inventory;
- finished products inventory.

Each one demands its own inventory control mechanism. Determining these mechanisms is difficult because efficient production, distribution, and inventory control strategies that reduce system-wide costs and improve service levels must take into account the various interactions at the various levels in the supply chain. Nevertheless, the benefits of determining these inventory control mechanisms can be enormous. Two important issues in inventory management are:
- demand forecasting;
- order quantity and reorder point calculation.

By the end of the course, students will have an understanding of the following issues:
- corporate strategy for coping with huge variability in customer demand;
- the relationship between service and inventory levels;
- the impact of lead time and lead time variability on inventory levels;
- effective inventory management policy;
- the use of supply contracts by buyers and suppliers to improve supply chain performance;
- approaches used to forecast future demand.

Prof. Dr. C. VAN MECHELEN