Exam 4 Notes

Exam 4 Notes - Chapter 15 Purpose of Inventories meet...

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Chapter 15 Purpose of Inventories - meet ongoing demand - allow a “decoupling” of production and demand - cover unexpected spikes in demand - cover seasonal variations - take advantage of quantity discounts (less expenseive per unit for shipping) - protect against uncertainties -price going up - supply being cut off - provide for transit Types of Inventory Costs 1. Carrying (holding) -cost of storage and handeling -deterioraTion and loss 2. Ordering -processing and receiving orders -set-ups and overhead 3. Stock out -unpredictable Inventory Cost Theory Chart with 3 curves - total cost, carrying cost and ordering cost -x axis is lot size -y axis is annual cost Independent Demand Dependent Demand External Demand Internal Demand -FG and replacement parts -raw materials Should be forecast Should be derived Replenishment philosophy Requirements Philosophy Continuous Review System AKA- Q system or Fixed-Order-Quantity System Order Quantity (Q) and Reorder Point (P) fixed Order Interval (P) variable (depends on demand during lead time period)
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This note was uploaded on 05/14/2008 for the course BI 326 taught by Professor Treleven during the Fall '08 term at John Carroll.

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Exam 4 Notes - Chapter 15 Purpose of Inventories meet...

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