Chapter 13 entitled 'Inventory management' relates to the management and control of inventories, and scheduling, often key factors of operation management to achieve profit and/or cost objectives while satisfying customers. The basic issues are how to best manage resources to effectively match supply and demand. | Inventory Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. You should be able to: Define the term inventory, list the major reasons for holding inventories, and list the main requirements for effective inventory management Discuss the nature and importance of service inventories Explain periodic and perpetual review systems Explain the objectives of inventory management Describe the A-B-C approach and explain how it is useful Describe the basic EOQ model and its assumptions and solve typical problems Describe the economic production quantity model and solve typical problems Describe the quantity discount model and solve typical problems Describe reorder point models and solve typical problems Describe situations in which the single-period model would be appropriate, and solve typical problems 13- Student Slides Inventory A stock or store of goods Independent demand items Items that are ready to be sold or used Inventories are a | Inventory Management McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. You should be able to: Define the term inventory, list the major reasons for holding inventories, and list the main requirements for effective inventory management Discuss the nature and importance of service inventories Explain periodic and perpetual review systems Explain the objectives of inventory management Describe the A-B-C approach and explain how it is useful Describe the basic EOQ model and its assumptions and solve typical problems Describe the economic production quantity model and solve typical problems Describe the quantity discount model and solve typical problems Describe reorder point models and solve typical problems Describe situations in which the single-period model would be appropriate, and solve typical problems 13- Student Slides Inventory A stock or store of goods Independent demand items Items that are ready to be sold or used Inventories are a vital part of business: (1) necessary for operations and (2) contribute to customer satisfaction A “typical” firm has roughly 30% of its current assets and as much as 90% of its working capital invested in inventory 13- Student Slides Management has two basic functions concerning inventory: Establish a system for tracking items in inventory Make decisions about When to order How much to order Student Slides 13- Periodic System Physical count of items in inventory made at periodic intervals Perpetual Inventory System System that keeps track of removals from inventory continuously, thus monitoring current levels of each item An order is placed when inventory drops to a predetermined minimum level Two-bin system Two containers of inventory; reorder when the first is empty Student Slides 13- Purchase cost The amount paid to buy the inventory Holding (carrying) costs Cost to carry an item in inventory for a length of time, usually a year Ordering costs Costs of ordering and .
