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Inventory Management - Coggle Diagram
Inventory Management
Inventory control graphs
Record the buffer inventories, maximum inventories
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Optimum order size
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Operations managers usually order their inventories on the basis of the Economic Order Quantity (EOQ)
EOQ is the optimum inventory level where the costs incurred are minimum (both re-ordering costs and stock-holding costs)
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supply chain management
The network of all the business activities involved in creating a product for sale, starting with the delivery of raw materials and finishing with the delivery of the finished product.
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Benefits
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Reduces expenses on buying, storing and decreasing waste
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Inventory holding
Inventory holding costs
- Opportunity cost – working capital tied up in inventory could be used elsewhere. Higher interest rates, higher the opportunity cost of holding inventory.
- Storage cost – inventories must be held in appropriate, safe conditions to avoid wastage. Higher inventory, higher the storage costs
- Risk of wastage and obsolete- if the inventory is kept and unused it may become obsolete
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