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, …

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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 …

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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 …

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