COMM 225 Lecture Notes - Lecture 12: Economic Order Quantity, Warehouse Management System, Radio-Frequency Identification
Document Summary
Management of finished goods, raw material and spare parts have to forecast the demand because it is unknown, called independent demand. Demand depend of the production schedule for finished goods. Inventory or stock is any product or material sitting idle in a warehouse or storeroom kept for future use or sale. Inventory represents 30% of a company"s current asset and 90 % of the working capital is invested in inventory. Roi = (profit tax expense)/assets, reduction in inventory can result in increase in roi. It is the major source of revenue for retailers but service companies do not carry inventory. Inadequate management result in both under stocking with missed sales and deliveries or overstocking that unnecessary tie up funds or storage space. The two main concerns are: level of customer service (availability):right goods, right place in sufficient quantity the inventory costs: costs of holding and ordering inventory.
