19018
18-Apr-20
1 of 5 level: credit: planned review date: sub-field: purpose:
LOGISTICS OPERATIONS
Demonstrate knowledge of inventory management in a logistics operation
4
12
February 2004
Logistics
People credited with this unit standard are able to: explain types of inventory; explain the concepts and objectives of inventory management; explain demand analysis and forecasting; describe inventory management techniques; and explain ordering systems and order quantities. entry information: accreditation option: moderation option:
Open.
Evaluation of documentation and visit by NZQA and industry.
A centrally established and directed national moderation system has been set up by the NZ Motor Industry Training
Organisation (Incorporated). special notes: 1 Definitions
Organisational procedures refer to formally documented instructions in the workplace which are available to candidates, providers, and assessors.
ABC analysis is a term used by industry for a commonly used technique for analysing data. It is based on
Pareto’s Law, generally known as the 80/20 rule.
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New Zealand Qualifications Authority 2020

19018
18-Apr-20
2 of 5
LOGISTICS OPERATIONS
Demonstrate knowledge of inventory management in a logistics operation
2 A logistics operation may form part of an organ isation’s activities or it may constitute a complete organisation.
Elements and Performance Criteria element 1
Explain types of inventory. performance criteria
1.1 Manufacturing inventories are explained in terms of raw materials and work in progress.
1.2 Distribution inventories are explained in terms of finished goods, maintenance, and supplies inventories.
1.3 The components of inventory are explained in terms of fluctuation in supply and demand, anticipation of future events, large lot sizes, and goods in transit. element 2
Explain the concepts and objectives of inventory management. performance criteria
2.1 The primary objectives of managing inventory are explained in terms of balancing the conflict between the objectives.
Range: maximise customer service, minimise inventory levels, minimise costs of inwards goods, maximise production efficiency, maximise transportation efficiency.
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New Zealand Qualifications Authority 2020

19018
18-Apr-20
3 of 5
LOGISTICS OPERATIONS
Demonstrate knowledge of inventory management in a logistics operation
2.2 The five phases of the product life cycle are explained in terms of the impact on inventory stocks.
2.3 The costs of inventory are explained in terms of capital, storage, deterioration, shelf life, obsolescence, and insurance. element 3
Explain demand analysis and forecasting. performance criteria
3.1 The classifications of demand are explained in terms of inventory items.
Range: random/ predictive demand, stable/ trend/ seasonal demand, fast/ slow moving demand, bought out / own manufactured items.
3.2 Profiling demand is explained using examples and/or graphs.
Range: captured/lost demand, distribution, variability.
3.3 Methods of forecasting future demand are explained using examples and/or graphs.
Range: simple average, weighted average, moving average, moving average with trend, exponential smoothing, seasonal indices, base series methodology, standard deviation.
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New Zealand Qualifications Authority 2020

19018
18-Apr-20
4 of 5
LOGISTICS OPERATIONS
Demonstrate knowledge of inventory management in a logistics operation element 4
Describe inventory management techniques. performance criteria
4.1 The reorder points inventory management method is described in terms of continuous review and periodic review reorder points.
4.2 Methods for calculating safety or buffer stock are described using examples and/or graphs.
4.3 Distribution resource planning is explained using examples and/ or graphs.
4.4 Inventory management using ABC analysis is explained using examples and/or graphs. element 5
Explain ordering systems and order quantities. performance criteria
5.1 Ordering systems are assessed against volume, trend and variability of demand, item and systems costs, and data availability.
Range: continuous review ordering system, periodic review ordering system.
5.2 The costs involved in establishing order quantities are explained in terms of placing an order, holding stock, and running out of stock.
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New Zealand Qualifications Authority 2020

19018
18-Apr-20
5 of 5
LOGISTICS OPERATIONS
Demonstrate knowledge of inventory management in a logistics operation
5.3 Two methods of calculating order quantities are explained using examples and/or graphs.
Range: includes Economic Order Quantity.
Comments to:
NZ Motor Industry Training Organisation (Incorporated)
Unit Standard Revision
PO Box 10803
Wellington 6143 by February 2004.
Please Note: Providers must be accredited by the Qualifications Authority before they can offer programmes of education and training assessed against unit standards.
Accredited providers assessing against unit standards must engage with the moderation system that applies to those unit standards. [Please refer to relevant Plan ref: 0092]
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New Zealand Qualifications Authority 2020