Category Archives: Inventory Systems for Independent Demand

Inventory Costs

Inventory Costs In making any decision with respect to inventories, the following costs should be taken into consideration: Holding or Carrying Costs Thi broad category i usually subdivided into three segments: storage costs. capital costs. and obsolescence/shrinkage cost. Storage costs include the cost of the storage facility in the form of rent or depreciation. insurance, taxes, utilities, security. and facility

Reasons for Maintaining Inventory

Reasons for Maintaining Inventory Organizations maintain inventories for several reasons. These include 1. To protect against uncertainty. For purposes of inventory management. We examine uncertainty in three areas. First. there uncertainty with report raw materials. which necessitates raw material inventory. Here. uncertainty pertain, both to the lead time that can vary due to unexpected delays and to (he amount o

Definition of Inventory

Definition of Inventory Inventory is defined as the stock of any item or resource used in an organization. An inventory management system is the set of policies and controls that monitors levels of inventory and determines (a) what levels should be maintained, (b) when stock should be replete head and (c) how large orders should be. In a broader context. inventory can include inputs such as human. financial. energy

Managerial Issue

Managerial Issue Management’s view towards inventory has changed significantly over the past several years. Previously, managers perceived inventory as an asset because it appears as an asset in the firm’s financial reports. However, as seen in the opening vignette, this is no longer th~ case. As we have seen, product life cycles are becoming ever shorter, increasing the likelihood of product obsolescen

Inventory Systems for Independent Demand

Chapter Objectives • Introduce the different types of inventories that can exist in an organization and provide a rationale for why companies maintain inventories. • Identify the various costs associated with carrying and maintaining inventories. • Define the classical inventory models and the conditions necessary for them to be applicable. • Show how the economic order quantity IS calculated for each of th

Current Trends in Inventory Management

Current Trends in Inventory Management tory really isn’t an asset, but rather a liability. Consequently, the average amount of inventory  that these fir.ms have on hand relative to their annual sales has been going down in recent years. even though in many cases the number of products they make has increased. Firms have been able to reduce their inventories for several reasons.First,  companies  ave focu

ABC Inventory Planning

ABC Inventory Planning  All inventory systems are plagued by two major problems: maintaining adequate control over each inventory item and ensuring that accurate re cords of stock on hand are kept. In this section, we present ABC analysis-an inventory system offering a control technique and inventory cycle counting that can improve record accuracy.Maintaining inventory through counting, placing orders, receiving

Additional Issues in Inventory Management

Additional Issues in Inventory Management Determining Realistic Costs Determining Realistic Costs lost inventory models give optimal solutions so long as the conditions of the system meet he constraints and/or assumptions of the model. While this is easy to state. it is difficult to implement. Obtaining actual order. setup. carrying. and shortage costs is often difficultvmetimes impose .ible. Part of the problem

THE APPLICATION OF YIELD MANAGEMENT AT AMERICAN AIRLINES

THE APPLICATION OF YIELD MANAGEMENT AT AMERICAN AIRLINES Yield management is widely used today in the airline industry to maximize revenues and profits. American Airlines was one of the first companies to use yield rat engagement to (a) establish prices, (b) determine for a given flight what   percentage of capacity it should allocate to each price, and (c) determine the restrictions necessary to segment the mar

Inventory Management in Services

Inventory Management in Services In service operations, the “product” sold is considered highly perishable. As discussed in the previous chapter, hotel rooms that are unoccupied for one night cannot be saved for another night. Similarly, airline seats on a plane that.are not used on a given date cannot be saved for use at a future time Yield Management or Revenue Management Because the product sold i