Chapter 9 Supply Chain Inventory Management Flashcards
Lot size
The quantity of an inventory item management either buys from a supplier or manufacturing using internal processes
Inventory
A stock of materials used to satisfy customer demand or to support the production of services or goods
Inventory holding costs
The sum of the cost of capital and the variable costs of keeping items on hand, such as storage and handling, taxes, insurance and shrinkage
Stock out
An order that cannot be satisfied resulting in a loss of the sale
Back order
A customer order that cannot be filled when promised or demanded but is filled later
Ordering cost
The cost of preparing a purchase order for a supplier or a production order for manufacturing
Setup cost
The cost involved in changing over a machine or workspace to produce a different item
Quantity discount
A drop in the price per unit when an order is significantly large
Raw materials RM
The inventories needed for the production of services or goods
Work in progress WIP
Items, such as components of assemblies, needed to produce a final product in manufacturing or service operations
Finished goods FG
The items in manufacturing plants, warehouses, and retail outlets that are sold to the firm’s customers
Cycle inventory
The portion of total inventory that varies directly with lot size
Lot sizing
The determination of how frequently and in what quantity to order inventory
Safety stock inventory
Surplus inventory that a company holds to protect against uncertainties in demand, lead time, and supply changes
Anticipation inventory
Inventory used to absorb uneven rates of demand or supply
