Home » Inventory Systems for Independent Demand
Single-Period Inventory Model
Certain characteristic's are associated with products that fall into the single-period inventory model. These include (a) the product is only viable for sale during a single time period; (b) the demand for the. product is highly variable, but follows a known probability distribution; and o(c) the scrap value of the product or the value of the product after the time period has elaps
Perishable Inventory
While all inventories are subject to obsolescence, there are some products that are considered highly peri able in that they are only viable for a very short time period. After that period has elapsed. their value decreases significantly, and the reduced value is often only their salvage or scrap value. Examples of such products include newspapers and Christmas trees. In each case. the valu
Economic Order Quantity Models in Relation to the RealWorld
Recently. criticizing classical inventory models eems fashionable to some members of industry and consulting groups. Proportionately, there is much less open criticism from academia. In a manufacturing environment, the major weaknesses associated with the classical EOQ models focus on the numbers. These numbers are the values assigned to setup costs,
Fixed- Time-Period Model
With a fixed-time-period model. inventory is counted at fixed intervals. such as every week or every month. Counting inventory and placing orders on a periodic basis are desirable for those situations when vendor make routine visits to customers and take "orders for their complete line of products, or when buyers want to combine orders to save on transportation costs. Other firms operat
Basic Inventory Models
Basic Fixed order Quantity Model
The simplest node in this category is when all aspects of the situation are known with certainty. If the annual demand for a product is 1,000 units, it is precisely 1,000-not 1,000 plus or minus 10 percent. In addition, the setup costs and holding costs are known and constant. Although the assumption of complete certainty is rarely valid, it provides a good
Independent versus Dependent Demand
Briefly. the distinction between independent and dependent demand is this: With independent demand. the demands for various items are unrelated to each other and therefore the required quantities of each must be determined separately or independently. With dependent demand (which is addressed in detail in the next chapter). the requirement for any one item is a direct result
COMPANIES WRITE OFF MILLIONS OFDOLLARS IN OB- SO INVENTORIES
During the economic slowdown of 2000-2001 (also referred to by some as a recession). many high-technology companies had to write off significant amounts of obsolete inventories These inventories were the result of the inability of these firms' managers to anticipate the economic downturn and its associated decrease in sales. These
excessive inve
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 obsolete cents/shrinkage cots. Storage costs include the cost of the storage facility in the form of rent or depreciation. insurance, taxes, utilities, security. and fa
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 i~ uncertainty with re'pel'! to ra« materials. which necessitates raw material inventory. Here. uncertainty pert.un-, both to the lead time that can vary due to unexpected delays and t
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 hed. and (c) how large orders should be.In a broader context. inventory can include inputs such as human. financial. ener
