Chapter 6_1 Inventory Management

Question 1

How do we determine good inventory management

Answer 1

High Inventory Turnover = ITR = turnover per period / average inventory

Question 2

Study these Terminology

Answer 2

Lead time, Safety Stock, Reorder Level/Point, Shortages/Backlogs, Order/replenishment cycle

Question 3

What are some relevant costs when it comes to inventory management?

Answer 3

Inventory holding costs, Procurement costs (producing or acquiring goods), Shortage costs (hard to determine - loss of sales, etc.), and Depreciation costs

Question 4

What are the two main models used?

Answer 4

Deterministic and stochastic. Furthermore, we can develop mindsets to inventory management through the following: infinite vs. finite time horizon, periodic vs. continuous inspection, fixed vs. variable order quantities, and immediate vs. gradual replenishment of inventory

Question 5

With consideration to the EOQ model, what would happen if the inventory cost was large and procurement costs were low?

Answer 5

A Just in Time order policy would be wise to take into account.

Question 6

Which method, other than mixed-integers, is used to solve order problems?

Answer 6

Wagner - Whitin. It is mostly used to solve deterministic problems with varying demand.