Please enable JavaScript.

Coggle requires JavaScript to display documents.

Inventory Management, the timing decision, Controlling inventory,…

- - - - Preparing the order
      - Communication with suppliers
      - Arranging for delivery
      - Making payments and maintaining internal records of the transaction
- - - - Working capital costs
      - Storage costs
      - Obsolescence risk costs
      - HC = Holding cost per unit x average inventory (Ch x Q/2 )
    - - Cost of placing the order (including transportation of items if relevant)
      - Price discount costs
      - OC = ordering cost x number of orders per period (Co x D / Q)
    - - The time between order = EOQ / D
      - Order frequency = D / EOQ per period
- - - - MP / Q = P - D
        
        M = O(P - D) / P
        
        As before, TC = HC + OC, and so
        
        Ct = (ChQ(P-D)) / 2P+CoD / Q
        
        dCt / dQ=(Ch(P-D)) / 2P- CoD / Q^2
        
        Again, equating to 0 and solving Q, EBQ =
        
        1 more item...
- - - - The optimum time interval between orders: tf=EOQ / D
- - - - 20% or so of high, usage-value items that account for around 80% of the total usage value
    - - medium usage value, usually the next 30% of items, which often account for around 10% of the total usage value
    - - low usage value items that, although comprising around 50% of the total types of items stocked, accounts for around 10% of the total usage value of the operation
- - - - a) Have a reasonably accurate idea of costs, such as holding or ordering costs
      - b) Have accurate information that really does indicate the actual level of stock and sales
    - - Keying errors
      - Quantity errors
      - Damaged or deteriorating inventory not recorded
      - The wrong items being taken out of stock, but the records not being updated
      - Delays between the transactions and the records being updated
      - Items being stolen from the inventory