GMS 401 Lecture Notes - Lead Time, Barcode, Carrying Cost
16 Oct 2011
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Document Summary
Inventory is the stock of any item or resource used in an organization and can include: raw materials, finished products, component parts, supplies, and work-in-process. Most companies have 30% of assets in inventory, and 90% of working capital. A reduction in inventories may lead to a significant increase in roi. An inventory system is the set of policies and controls that monitor levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be. Inventory management is planning, coordinating, and controlling activities related to the flow of inventory into, through, and out of an organization. To meet anticipated demand: companies need to hold some inventory of the average demand, as lead time may vary. To smooth production requirements: beer and ice cream manufacturers build up inventory during offseason periods to meet high requirements during peak season.
