Sku stock keeping unit unique identifying number used

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SKUStock Keeping Unit. Unique identifying number used to track each unique product customers can purchaseShrinkageTypes of inventoryRM, WIP, FG, spare/replacement parts, capital equipment & MRORelationship between risk and inventoryCarrying inventory can come at a hefty price, thus there is risk. Not carrying inventory also comes at a risk: the risk of not having inventory, the riskof not being able to satisfy the needs of the customer.Purchasing considerationsStorage, Transport, Shrinkage, Other Inventory needs, Money and Legal considerationsCosts associated with inventory-cost of item-holding/ carrying cost: warehouse rent, security, shrinkage, materials handling, insurance-ordering costs: order clear salary, delivery fees, e-procuremnt system-stockout cost (customer service costs)Inventory Classificationslong-term, seasonal, safety stock, market, pipeline, anticipationQuantitative forecastingusing historical data to predict future demand - Value of numbers? Limitation of numbers?- How much do companies value statistics?- Casual Methods - Linear Regressions- Time Series - Averages, Trends, Seasonal...Qualitative forecastingusing queries of experts to predict future demand - Irrelevant current data, lack of current data, incomplete data- New products, new markets- When is the group "smarter" than the expert?- more accurate but we need both methodsHigh Inventory LevelsPro's: (Con's for low)- higher levels of customer service --> having inventory will help a company address their immediate demand for product- quality discounts may be possible--> lower per unit cost- fewer orders will need to be placed --> possibly lower ordering costs and transportation costs- greater security against unexpected demand variability
BUYING the Inventory - Cost to purchase (consider quantity discounts)STOCKING OUT - Poor customer service levelsPAYING the Purchasing People- Costs to order inventoryTRANSPORTATION: Ease, CostCon's: (Pro's for Low)Cost of HOLDING InventoryMaterials handling - Cost to HANDLE inventoryLOSS of Inventory - Shrinkage/ObsolescenceTIES UP YOUR CASH - Capital investment optionsCycle stockinventory used to accommodate normal demand or inventory that varies directly with lot sizeCosts of inventory- cost of the item = purchase cost- holding or carrying costWarehouse Rent, Security Systems, Depreciation Obsolescence/Shrinkage, Materials HandlingInsurance, Opportunity Costs- ordering costsOrder Clerk Salary, E-Procurement System, Delivery Fees- stockout cost (or customer service cost)Stock-outs, Backorders, Lost Profits, Late Fees"ill-will" (Difficult to Calculate)just know the idea behind thisBe able to discuss, explain, and use the Total Cost Formula. Formulas, calculations, graphs, etc.Total cost formula - Know all parts of the formula.Time between orders (TBO)Ideally, companies want consistency in purchasingSame number of units every X weeks. Suppliers appreciate it too.

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