SCM 303 Study Guide - Final Guide: Carrying Cost
Document Summary
Forecast using simple average: where ai is the actual demand during period i and n is the total number of periods. Forecast using moving average: where ai is the actual demand during period i and n is the number of most recent periods. Inventory turnover = where wi is the weight applied to period i and n is the number of most recent periods. Economic order quantity (eoq) = q* = 2. Abc classification: a items are top 15%; b items are next 35%, and c items are lowest 50% where d = demand quantity; s = ordering cost; i = % holding cost; c = unit price. Number of orders per year = d/q where d is the annual demand and q = order quantity. Reorder point = r = dl where d = average daily demand during the lead time and l = lead time.
