inventory management Flashcards
what are the 3 types of inventory?
raw materials, work in progress, finished goods
what is inventory held for?
Production, seasonal changes, customer demand, as a buffer
What influences how much inventory is held?
demand, cash flow issues, risk of inventory perishing
What is the cost of holding inventory?
Storage rental costs, risk of perishing, stock out may cause delays
What influences re-order level?
supplier lead time, severity of stock out implications, demand
Benefits and drawbacks of high inventory levels?
More inventory less delays, but more perishing stock
Benefits and drawbacks of low inventory levels?
less storage costs, less able to meet unexpected changes in demand
What is the maximum level?
max level of inventory held
What is the re-order level?
trigger point to re-order with supplier
What is lead time?
time between ordering and receiving inventory
What is the minimum level
Minimum amount of inventory held
What is buffer stock?
Contingency inventory held incase of unexpected delays
