Inventory Flashcards
inventory
definition
current assets e.g toilet paper (somethingyou hold in stock waiitng to be used mostly non-perishable)
manufacturing fundamental to modern economies
national security
food, machinery esential for national security
manufacturing fundamental to modern economies
employment
keeps millions of people in employment
manufacturing fundamental to modern economies
source of innovation
improvements, highly skilled jobs
what industires hold inventory
service industries e.g banking, hospitals, restaurants etc.
factors negativley affecting inventory management
- product variety
- shoretened product lifecycles
- increasedglobal sourcing
operating profit
equation
revenue - operating expenses
operating expenses
how is it affected by inventory
- inventory holding costs are significant component
- labour costs can be reduced by effective inven control in production scheduling
inventory turnover
equation
annual sales or usage/ average inventory
inventory turnover
problems
- performance measure risks
- doesnt’ tell which specific inventory to turnover without
- immpacting customer satisfaction
return on investment
equation
prodit (after taxes)/ average investment (level of sales)
measures of effectiveness
what do analysts tend to focus on
single quantifiable measures e.g cost, service levels etc
measures of effectiveness
unqualifiable measures
- minimising political conflicts
- high level of flexibility
- human effort levels
