Chapter 8 Inventory Management Flashcards
Cycle stock
Inventory needed to satisfy normal demand during the course of an order cycle
Safety stock
Inventory held in addition to cycle stock to guard against uncertainty in demand or lead time
Pipeline stock
Inventory en route between various fixed facilities in a logistics system
Speculative stock
Inventory held for several reasons:
- Seasonal demand
- Projected price increases
- Potential shortages of product
Psychic stock
Inventory carried to stimulate demand
Inventory carrying costs
Costs associated with holding inventory
Inventory shrinkage
More items recording entering than leaving facilities (damage, theft, obsolescence)
Ordering costs
Costs associated with ordering inventory (setup, order costs)
Stockout costs
Estimating the costs/penalties for a Stockout
Back order
Customer places an order for an item that is out of stock
Reorder point
Level of inventory at which a replenishment order is placed
EOQ
Deals with calculating the proper order size with respect to two costs (carrying & handling inventory)
ABC analysis of inventory
Recognizes that all inventories are not of equal value and all inventories should not be managed in the same way
Dead inventory
Product with no sales in the past 12 months
Inventory turnover
Number of times that inventory is sold in a one year period
Complementary products
Inventories that can be used or distributed together
Substitute products
Products that fill the same need or want as another product
JIT approach
Seeks to minimize inventory by reducing safety stock, as well as by having the required amount of materials arrive at the production location at the exact time that they are needed
Lean (manufacturing)
Focuses on the elimination of waste and the increase of speed and flow
Service parts logistics
Involves designing a network of facilities to stock service parts, deciding upon inventory holding policies, stocking the required parts, and transporting parts from stocking facilities to customers
Vendor managed inventory
The size and timing of replenishment orders are the responsibility of the manufacturer
Inventory
Stocks of goods and materials that are maintained for many purposes
