Working Capital Flashcards
Regression analysis
used to find the relationship between two or more independent variables
Queuing theory
to determine most efficient and effective way to move people or goods through a line and keeping waiting times to a minimum
Markov process
to study systems and changes that take place in the systems during repeated trials
Forms of inventory loans
Blanket inventory loan
Trust receipt loan
Warehouse financing
Blanket inventory loan
covers an entire group of usually low cost homogeneous items (tires)
Trust receipt loan
lender holds title and the borrower keeps possession of the collateral (automobile dealers)
Warehouse financing
lender controls title and takes possession of the collateral
Components of credit policy
1) Credit period–when the payment is due
(2) Credit standards–determines which customers are granted credit
(3) Collection policy–enforcement of collection process
(4) Discount–reductions offered to speed up payments
Shipping Costs
NOT Carrying Costs
Outgoing = Selling
Incoming = Ordering cost (include in inventory) (ex. inspection costs, Handling)
purpose of safety stock
Avoid stock outs and keep when demand is uncertain
Which increases carrying costs
improves service level to customers
Materials requirements planning (MRP)
planning and controlling technique for managing dependent-demand manufacturing inventories.
Regression analysis
statistical procedure for estimating the relation between variables.
Linear programming
mathematical technique for maximizing or minimizing a given objective
just-in-time (JIT) purchase policy is successful in reducing the total inventory costs of a manufacturing company - what would be the end results
Increase in Purchase Costs
Decrease in Carrying Costs
Increase in Stock out Costs
Money Market Security examples
One year or less maturity
Commercial paper
Bankers acceptance
Treasury Bills
Negotiable certificate of deposit
