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Unformatted text preview: liberately to separate the decision making at
the different echelons. - 14 This is different than classifying the inventories for
accounting purposes (e.g., in terms of raw materials,
supplies, finished goods, etc.) Frameworks for Inventory
The inventories must be controlled at the item level.
Stock-keeping unit (SKU)
E.g., same style shoes in different sizes are typically
In practice, SKUs can be defined capturing lower level
of detail Observation regarding the usage rates of
different SKUs 15 20% of the SKUs account for 80% of the total annual
dollar usage Frameworks for Inventory
A-B-C curve example
volume Source: http://www.resourcesystemsconsulting.com
16 Frameworks for Inventory
Class A items
The most important class of items
5%-20% of SKUs; 80% of the value
Review (costs, demand forecasts) more frequently Class B items 17 Of secondary importance
Often, the largest number of SKUs fall in this category
30%-50% of SKUs; 15% of the value Class C items
30%-50% of SKUs; 5%-10% of value
Don’t invest much time to control these items
Use simple decision and monitoring systems A-B-C Classification
Example: 18 A-B-C Classification A-B-C Classification 19 20 Mini In-Class Exercise
Work in groups of 2-3 - Hospital
- University cafeteria
- Gas station Suppose that you are the managers (or
directors) of one of the following organizations:
- Automobile factory
- Bookstore Answer the following:
3. 21 What is the mission of your organization? Define two critical
aspects that you would include in the mission statement.
Define two objectives (one for each critical aspect); how
would you know your organization has achieved its mission?
What types of inventories would you observe in your
organization? Think about at least two. Discuss the reasons
for holding such inventory....
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This note was uploaded on 04/14/2013 for the course ECET 101 taught by Professor Michealolimpus during the Winter '12 term at Briarwood College.
- Winter '12