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TSM 325 F11 Lecture-13B

TSM 325 F11 Lecture-13B - TSM 325(AE Agron AnS BSE BusAd...

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11/21/2011 1 TSM 325 (AE, Agron, AnS, BSE, BusAd, Econ) Biorenewable Systems Week 13 – Session B November 15, 2011 24 Inventory - the stock of any item or resource used in an organization Four broad categories of inventories Finished goods Raw materials Work-in-process (WIP) Maintenance, repair & operating (MRO)
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11/21/2011 2 25 Two primary functions of inventory: 1. Buffer uncertainty in the marketplace i.e. satisfy customer demand Meet Independent demand: Set by market conditions Independent of operations ‘Replenishment’ philosophy 2. Decouple dependencies in the supply chain i.e. facilitate production Meet Dependent demand: Components and assemblies for creating good or service Demand is dependent on the factory or service schedule Demand comes in clumps ‘Requirements’ philosophy 26 Item cost – costs for each unit for material and labor Ordering or setup costs Carrying (holding) costs Risk Costs Obsolescence Inventory shrinkage
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