MGT 3121 Lecture 8: MGT 3121

• School: Baruch College
• Department: Management
• Course: MGT 3121
• Professor: William Chien

Document Summary

Forecast is very important in product and process. Inventory: something you can make and store away. With production, you can produce them earlier. Wait for holiday season to come, store them. If product hasn"t reached customers hand it is still inventory (supply chain management) inventory management. Tied to a lot of investment capital. Its as if you"re touching it and there and you can see how it works. Using this technique we can do away with physical presence of products. Constant if no quantity discount -> basic eoq model. Holding cost: it is very expensive to hold inventory. Economic order quantity: is the best order quantity. Minimize total cost you can"t get any better than that. Green line: level of inventory we set up. When it touches reorder point you reorder. You will go below zero line -> you will run out of stock. Proactive way to set order point so that it is not too high or too low.