OMIS 2010 Lecture Notes - Lecture 11: Service Level, Standard Deviation, Stockout

• School: WLU
• Department: Operations Management and Information System
• Course: OMIS 2010
• Professor: Linda Lakats

Document Summary

Four categories of inventory costs: ordering or setup costs - result of the work involved in placing purchase orders with suppliers or configuring tools, equipment, and machines within a factory to produce an item. 3. demand: unit cost - price paid for purchased goods or the internal cost of producing them. Inventory holding / carrying costs - expenses associated with carrying inventory. Shortage / stockout costs - costs associated with a sku being unavailable when needed to meet. >a stock-keeping unit (sku) is a single item or asset stored at a particular location. Stockout: the inability to satisfy demand for an item. Backorders occur when a customer is willing to wait for an item. Lost sales occur when the customer is unwilling to wait and purchases the item elsewhere. Independent demand is demand for an sku that is unrelated to the demand for other skus and needs to be forecast. (cars, appliances, computers)