E3, Ch 20: Inventory Flashcards
inventory =
cash
inventory is the _______ _____ on a company’s balance sheet, but try not to have ___ ____ inventory sitting.
largest asset,
too much
work in process inventory
materials scheduled or currently in production
supplies inventory
parts or materials used to support the production process but not usually part of the product
transportation/pipeline inventory
inventory in transit
quantity discount model
a discount offered in price for ordering above a specific amount (bulk buying)
transportation discounts
discounts offered on shipping costs for ordering above a specific amount
revenue sharing
strategic alliance formed so both parties benefit from the product/service
ex. Netflix partnering with production companies to share revenue
reorder point – what is it, what is it based on
numerical pointassigned to product indicating when it should be ordered again
based on lead time
safety stock
inventory to protect against unexpected demand
periodic inventory system
more of a manual system, best for small businesses
requires a physical count; inexpensive and low-maintenancee
perpetual inventory system
what most businesses use; automatic/real-time tracking
continuous monitoring requiring inputs (ex. barcode scanning)
expensive and high maintenance but very accurate
economic order quantity (4)
- used for finished goods
- one product involved
- demand requirements are known
- demand is spread evenly throughout year
economic production quantity (4)
- used for raw materials or production
- one item involved
- product rate constant
- lead time does not vary
holding/carrying cost
cost of having inventory that is not selling
broad; including things like storage facilities, taxes, depreciation, insurance…