BUSI 3008 Lecture Notes - Lecture 9: Transfer Pricing, Business Process, Perfect Competition
6 Dec 2016
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Planning, coordinating and controlling all activities related to the full flow of inventory into the org, through and out of the org. These costs must be managed effectively in order to maximize net income: purchasing costs, ordering costs, carrying costs, stockout costs, costs of quality and shrinkage costs. Must decide how much to order of a given product. D = demand in units for a specific period. C = carrying cost for one unit in stock for the time period that is used for d. Quantity level of inventory on hand that triggers a new purchase order. Extra inventory held at all times above the quantity of inventory ordered determined by the eoq model. Annual relevant carrying costs of one unit for a year. Number of units sold per unit of time. Price and quality terms are defined by long-term purchase agreements. Electronic links are used to place purchase orders at a fraction of the cost of tradition method.
