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Inventory management (3. Five costs (Human Capital (It is related with the…
Inventory management
3. Five costs
Human Capital
It is related with the handling cost and knowledge and expertise which employees develop in the course of time to further increase the productivity of organizations
It is acquired some set of skills through the employees experience, exposure, training and so on which further increase their productivity eventually benefiting the organization.
Finance Cost
It is also known as the Cost of Finances (COF), which is the cost and interest and other charges involved in the borrowing of money to build or purchase assets.
Facility Cost
This is the cost of the warehouse, which includes depreciation on the building and interior racks, utilities, building insurance, and warehouse staff.
This is largely a fixed cost, and so can only be allocated to the inventory stored within the warehouse.
Management Cost
It is related to personnel and information technology charges. It is also involve in the process of planning and controlling the budget of a business
Procurement Cost
It is related with the cost in purchasing sch as inbound transport. It is to keeping inventory purchase costs low is to develop long term, mutually beneficial partnerships with reliable suppliers. Suppliers can offer price or volume discounts or price contracts to keep your costs at a reasonable level.
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1. Definition
A business's inventory is one of its major assets and represents an investment that is tied up until the item sells.
Inventory management is the practice overseeing and controlling of the ordering, storage and use of components that a company uses in the production of the items it sells.
The objective of inventory management is to provide uninterrupted production, sales, and customer-service levels at the minimum cost.
4. Three service classes
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Scheduled Delivery
Timing or rate of delivery s required by a buyer, or as agreed betweeen a buyer and a seller, for goods or service purchased for a future delivery period as well as ensure daily production operation is running smoothly
Critical
Product that is in urgent need, such as medical emergency
5. Strategies.
Postponed Logistics
It is related with delaying final product configuration until the very last moment. This allows the to reduce inventory and provide a more agile response to unpredictable product demand.
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