OMIS 338- EXAM 2 Latest Update Graded A+

OMIS 338- EXAM 2 Latest Update Graded A+ Inventory Management Objective of inventory management is to strike a balance between inventory investment and customer service Importance of inventory most expensive assets less inventory= lower costs but greater chance of running out more inventory raises costs but always keeps customers happy Functions of inventory Provide a selection of goods for anticipated demands separate various parts of the production process advantage of quantity discounts hedge against inflation Inventory Example Department store stockroom/warehouse grocery store auto work-in-process Types of inventory Raw material work-in-process finished goods maintenance/repair/oeprating (MRO) Raw material purchased but not processed work in process undergone some changes but not completed finished goods completed product awaiting shipment maintenance/repair/operating (MRO) necessary to keep machinery and processes productive material flow cycle input -- wait for inspection -- wait to be moved -- move time -- wait in queue for operator -- setup time -- run time -- output managing inventory using ABC analysis keeping records maintained ABC analysis divides inventory into three classes based on annual dollar volume, delivery problems, quality problems, high shortage or holding cost, anticipated engineering changes policies that focus on the few critical parts and not the many trivial ones Record accuracy with the periodic systems regular checks of inventory record accuracy with the perpetual inventory tracks receipts and subtractions on a continuing basis Independent demand for item is free from outside control of the demand for any other item in inventory basic economic order quantity model production order quantity model quantity discount model