Nt1310 Unit 7 Inventory Management
Chapter 7 Inventory Management
◊Distinguish dependent from independent demand inventories
◊Describe the four basic types of inventories and their functions
◊Understand the costs of inventory and inventory turnovers
◊Understand ABC classification, ABC inventory matrix and cycle counting.
◊Know RFID and how it can be used in inventory management
◊Understand the EOQ model and its underlying assumptions
◊Understand the Quantity Discount and the EMQ Models and their relationships with the basic EOQ model
◊Understand and be able to distinguish among the various statistical ROP models
◊Understand the continuous review and periodic review systems
●”Optimal” means a high level of customer service and inventory turns, but with low inventory investment …show more content…
The analysis recommends that problems falling into the most frequently occurring category be assigned the highest priority and managed closely.
●It is not uncommon that some firms choose to use more than three categories.
●The priority is most often determined by annual dollar usage. However, priority may also be determined by product shelf life, sales volume, whether the materials are critical components, or other criteria.
●When prioritizing inventories by annual dollar usage, the ABC system suggests that approximately 20 percent of the items make up about 80 percent of the total annual dollar usage, and these items are classified as the A-items. The B items make up roughly 40% of the items and account for about 15% of the total annual dollar usage, while the C items are the remaining 40% of the items, making up about 5% of the total annual dollar usage of inventory.
●Greater attention, safety stocks and resources are devoted to A-items.
●ABC inventory classification can be done monthly, quarterly, annually or nay fixed period. For the fast-moving consumer market, an A-item may become a C-istem within months or even weeks. Thus, ABC inventory classification based on annual dollar usage would not be very useful to
◊Distinguish dependent from independent demand inventories
◊Describe the four basic types of inventories and their functions
◊Understand the costs of inventory and inventory turnovers
◊Understand ABC classification, ABC inventory matrix and cycle counting.
◊Know RFID and how it can be used in inventory management
◊Understand the EOQ model and its underlying assumptions
◊Understand the Quantity Discount and the EMQ Models and their relationships with the basic EOQ model
◊Understand and be able to distinguish among the various statistical ROP models
◊Understand the continuous review and periodic review systems
●”Optimal” means a high level of customer service and inventory turns, but with low inventory investment …show more content…
The analysis recommends that problems falling into the most frequently occurring category be assigned the highest priority and managed closely.
●It is not uncommon that some firms choose to use more than three categories.
●The priority is most often determined by annual dollar usage. However, priority may also be determined by product shelf life, sales volume, whether the materials are critical components, or other criteria.
●When prioritizing inventories by annual dollar usage, the ABC system suggests that approximately 20 percent of the items make up about 80 percent of the total annual dollar usage, and these items are classified as the A-items. The B items make up roughly 40% of the items and account for about 15% of the total annual dollar usage, while the C items are the remaining 40% of the items, making up about 5% of the total annual dollar usage of inventory.
●Greater attention, safety stocks and resources are devoted to A-items.
●ABC inventory classification can be done monthly, quarterly, annually or nay fixed period. For the fast-moving consumer market, an A-item may become a C-istem within months or even weeks. Thus, ABC inventory classification based on annual dollar usage would not be very useful to