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Unformatted text preview: nsophisticated inventorymonitoring technique that is
typically applied to C group items
and involves reordering
inventory when one of two bins
is empty. economic order
quantity (EOQ) model
Inventory management technique
for determining an item’s optimal
order size, which is the size that
minimizes the total of its order
costs and carrying costs.
The fixed clerical costs of
placing and receiving an
The variable costs per unit of
holding an item in inventory for a
specific period of time. A firm using the ABC inventory system divides its inventory into three groups: A,
B, and C. The A group includes those items with the largest dollar investment.
Typically, this group consists of 20 percent of the firm’s inventory items but 80
percent of its investment in inventory. The B group consists of items that account
for the next largest investment in inventory. The C group consists of a large number of items that require a relatively small investment. The invento...
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