B A 360 Chapter Notes - Chapter 12: Pareto Principle, Package Pilferage, Toaster
Document Summary
Objective of inventory management is to strike a balance between inventory investment and customer service. To provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand. To decouple various parts of the production process. To take advantage of quantity discounts because purchases in larger quantities may reduce the cost of goods or their delivery. To hedge against inflation and upward price changes. Raw material inventory - has been purchased but not processed. Can be used to couple suppliers from the production process. Preferred approach is to eliminate supplier variability in quality, quantity, or delivery time so that separation is not needed. Work in process (wip) inventory - components or raw material that have undergone some change but are not completed. Exists because of the time it takes for product to be made (flow time) Maintenance/repair/operating (mros) - supplies necessary to keep machinery and processes productive.
