Bmgt353- final review

Bmgt353- final review - Chapter 13 Enterprise Resource...

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Chapter 13 Enterprise Resource Planning (ERP) system integrates merchandise planning with systems for managing supply chains and other business activities. Cycle Stock (aka Base Stock) is the inventory for which the level goes up and down due to the sales and replenishment process. o Retailers hope to reduce the base stock inventory to keep its inventory investment low ***Backup stock (aka safety stock or buffer stock) is the inventory used to guard against going out of stock when demand exceeds forecasts or merchandise is delayed. o Several factors determine the level of required backup stock: Depends on the product availability the retailer wishes to provide The greater the backup stock, the lower the chances of a stock out and the greater the availability of an SKU The greater the fluctuation in demand, the more backup stock is needed The amount of backup stock needed is affected by the lead time from the vendor Lead time is the amount of time between recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale Fluctuations in lead time also affect the amount of backup stock The vendor’s product availability also affects the retailer’s backup stock requirements Fill rate is the percentage of complete orders received from a vendor Inventory Management Report provides information about the current sales rate or velocity, sales forecasts, inventory availability, the amount on order, decision variables such as product availability, the backup stock needed to provide the product availability desired, performance measures such as planned and actual inventory turnover, and the appropriate ordering decisions for each SKU. Order point is the amount of inventory below which the quantity available shouldn’t go or the item will be out of stock before the next order arrives o Order point = sales/day x (lead time + review time) + backup stock Review time is the maximum time between reviews of the SKU ***Merchandise Budget Plan specifies the planned inventory investment in dollars in a fashion merchandise category over time. It is a financial plan that specifies how much money will be spent each month to support sales and achieve the desired inventory turnover and GMROI objectives o Not a complete buying plan because it doesn’t indicate the specific assortment of SKUs to buy or the quantities o The “monthly additions to stock” tells the buyer how much merchandise in retail dollars he or she needs to have, on average, at the beginning of each month for the retailer’s financial goals to be met o Line 1 of the plan projects what percentage of the total sales is expected to be sold in each month o Line 2 – monthly sales are the forecasted total sales for the 6 month period in the first column multiplied by each monthly sales percentage o Line 3 – monthly reduction % distribution – value of the inventory is reduced by markdowns, shrinkage, and discounts to employees.
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This note was uploaded on 11/15/2010 for the course BMGT 353 taught by Professor Staff during the Spring '08 term at Maryland.

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Bmgt353- final review - Chapter 13 Enterprise Resource...

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