Inventory Management Flashcards
What is inventory?
The number of flow units within the process.
What is inventory management?
The practice of regulating the quantity, location, and type of inventory in a process.
What are the types of inventory?
Raw material
* Work in progress
* Maintenance/repair/operating
Finished goods
What are the costs associated with inventories?
- Holding cost
- Ordering Costs
What are holding costs?
Costs of keeping items on hand (Handling, taxes, insurance, shrinkage)
What is shrinkage?
Losses from theft, obsolescence and deterioration
What is the percentage of inventory value that holding costs represent? For which industries is it the highest?
From 15% to 40% (highest for fashion and tech)
What are ordering cots?
Costs of placing an order and receiving the goods
When does optimal order quantity occur?
When ordering and holding costs are equal
