Rough cut capacity planning approximate balancing of

Info icon This preview shows pages 3–5. Sign up to view the full content.

View Full Document Right Arrow Icon
rough-cut capacity planning (approximate balancing of capacity and demand to test the feasibility of a master schedule) serves as the basis for short range planning, covers only a portion of the aggregate plan time fences - points in time that separate phases of a master schedule planning horizon (usually three phases): frozen- near term, delivery of a new order would be impossible or very costly or would delay another order; changes to orders very disruptive, authority lies with VP of manufacturing slushy- order entry necessitates tradeoffs but less costly and disruptive, authority lies with master scheduler; relative confidence in order process dates liquid- farthest out on time horizon, new orders or cancellations can be entered easily; order promise dates tentative, and authority lies with master scheduler inputs: beginning inventory, forecasts for each period of the schedule, and customer orders outputs: projected inventory, master production schedule, and uncommitted inventory ( available-to-promise inventory) Inventory Management inventory- stock or store of goods raw materials work in process (WIP)- partially completed goods finished goods inventories tools and supplies maintenance and repairs goods in transit to warehouses/distributers/customers a typical firm probably has about 30% of its current assets and perhaps as mch as 90% of its working capital invested in inventory; major source of revenues for retail and wholesale businesses is the sale of merchandise (inventory) return on investments (ROI)= property after taxes divided by total assets; a reduction in inventories can result in a significant increase in ROI Functions of Inventory: to meet anticipated customer demand (anticipation stocks, held to satisfy expected demand) to smooth production requirements (seasonal inventories) to decouple operations to protect against stockouts (risk of shortage can be reduced by holding safety stocks)
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
to take advantage of order cycles (inventory storage enables a firm to buy and produce in economic lot sizes w/o having to try to match purchases or production with demand requirements in the short run) to hedge against price increases to permit operations (work in process inventory) to take advantage of quantity discounts inventory management concerns: level of customer service= have the right goods in sufficient quantities at the right time, and costs of ordering and carrying inventories overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds; what matter: time and size of the orders performance measures: 1. customer satisfaction 2. inventory turnover - ration of annual cost of goods sold to average inventory investment, the higher the ratio the better 3. days of inventory on hand- a number that indicates the expected number of days of sales that can be supplied from existing inventory
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern