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Lesson 8 - Inventory Management Flashcards

(15 cards)

1
Q

Inventory

A

stock/store of goods, necessary for operations, but also contribute to customer satisfaction

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2
Q

Independent demand items

A

items that are ready to be sold/used, components
used would be

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3
Q

dependent-demand items

A

components used for product

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4
Q

Types of Inventory (Goal: achieve customer satisfaction while keeping inventory costs low)

A

Raw materials, Work-In-Process Inventory (partially completed goods), Finished-Goods inventory or merchandise (retail stores), Tools and supplies, Maintenance and repairs inventory (MRO), Goods-in-transit/ pipeline inventory

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5
Q

Functions of Inventory

A

meet customer demand (called anticipation stocks), to smooth production requirements (seasonal inventories), to decouple operations (buffers for breakdowns,..), reduce risk of stockouts (safety stocks to compensate for demand variability), take advantage of order cycles (buy in large economic sizes → periodic orders), to hedge against price increases, to permit operations (logical that there needs to be some WIP), take advantage of quantity discounts

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6
Q

Little’s Law

A

Avg. amount of inventory=avg demand rate*avg time a unit is in a system

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7
Q

Management functions - Keep track of inventory

A
  • Keep track of inventory:
    Inventory counting systems: periodic: physical count at fixed
    intervals, perpetual:keeps track of removals on continuous basis and orders at
    specificied Q, cycle counting: physical count
    Two-bin system: reorder when first container of inventory is empty, second is cushion
    Universal product code:bar code printed on label that has information about item
    Stock keeping units: similar, but alphanumeric and unique to each business
    Point-of-sale systems record items at time of sale
  • Forecast of demand
  • Knowledge of lead times
  • Estimates for purchase
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8
Q

Economic order quantity

A

how much to order
balances ACC & AOC

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9
Q

Economic Production Quantity

A

used when production in batches is in place -> no ordering but set up costs

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10
Q

Imax

A

max inventory

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11
Q

run time

A

production phase

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12
Q

cycle time

A

time between setups

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13
Q

Reorder Point

A

When to order
when quantity on hand of an item drops below this
amount, it is reordered

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14
Q

Cycle stock

A

amount of inventory needed to meet expected demand

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15
Q

Safety stock

A

inventory held to reduce probability of stockout because of variability

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