Intro_to_Inventory_USC

Intro_to_Inventory_U - Introduction to Inventory Management Professor Ashok Srinivasan 1 Intro to Inventory Costs The Planning and Control of

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Introduction to Inventory Management 1 1 Introduction to Inventory Management Professor Ashok Srinivasan 2 Intro to Inventory Costs • The Planning and Control of Inventory is a Major Concern in Operations Management • 2 Kinds of Inventory Costs – Inventory Investment • “Cost of Putting it There”—Purchase (production) Cost – Nationally: about 15% of GNP – For Many Firms: around 90 % of working capital, largest or second largest asset on balance sheet • How to tell if too high ? – Compare to others in industry – Compare to demand » Turns = Demand/Average Inventory » Track over time – High or Low depends on current information and control system (eg. Walmart)
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Introduction to Inventory Management 2 3 Intro to Inventory Costs-2 – Inventory Holding Cost • “Cost of Keeping it There” • Per-Unit Inventory Holding Costs – Charged on $/unit-time basis or % per-unit cost/unit-time basis – Cost of capital – Storage: Taxes, Insurance, Utilities – Other: Shrinkage, Obsolescence • Stockout-Related Costs – Lost sales – Backorders – Expediting, Substitution – Goodwill Loss 4 Roles Inventories Play-1 • Finished Goods
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This note was uploaded on 07/21/2009 for the course BUAD 311T taught by Professor Vaitsos during the Fall '07 term at USC.

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Intro_to_Inventory_U - Introduction to Inventory Management Professor Ashok Srinivasan 1 Intro to Inventory Costs The Planning and Control of

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