Chapter 12 Managing Materials Flashcards
The management and control of inventory, or items that have an expected useful life of less than one year
Inventory management
The management and control of inventory, services, and equipment from acquisition to disposition
Materials management
two major categories of inventory management and materials
- Patient Care
2. Administration
non-productive asset
does not grow or produce income.
Inventory counts as this
Total cost paid to vendors for a specific item during an accounting period
Purchasing cost
Administrative costs associated with placing a single order
Ordering cost
Cost of holding an inventory of items; includes an opportunity cost and a holding cost
Carrying cost
Cost associated with having insufficient inventory
Stock-out cost
Cost associated with having more than enough inventory
Overstock cost
Produces the minimum costs associated with keeping a specific item in inventory for one year
Total cost (TC)
Quantity of items that should be ordered each time to result in the minimum total inventory costs associated with them
Economic order quantity
Measures the number of times an organization turns over its inventory relative to operating revenue.
Inventory turnover ratio
The best way to evaluate inventory management is the
inventory turnover ratio
Total Operating Revenue / Inventory
Inventory turnover ratio
