MGSC 395 Chapter 9- Inventory Management

MGSC 395 Chapter 9- Inventory Management
the portion of total inventory that varies directly with lot size - ANS-cycle inventory

inventory that is created when an order for an item is issued but not yet received - ANS-Pipeline
Inventory

used to avoid customer service problems and hidden costs of unavailable components -
ANS-safety stock inventory

inventory used to absorb uneven rates of demand or supply (just in case) - ANS-Anticipation
Inventory

the process of dividing SKUs into three classes, according to their dollar usage, so that
managers can focus on items that have the highest dollar value - ANS-ABC analysis

1. inventory is tracked continuously
2. order quantity is fixed, but time between orders is variable
3. reorder point is calculated to determine when to reorder inventory to a fixed lot size
4. used in restaurants and retail - ANS-continuous review system (Q)

1. inventory is tracked periodically
2. order quantity is fixed, but time between orders is variable
3. target inventory level is established. order the difference between the inventory position and
target inventory level - ANS-Periodic Review System (P)

2 containers of inventory, reorder when the first is empty - ANS-2 bin system