ACCTG 1 Lecture Notes - Lecture 9: Service Level, Safety Stock
Document Summary
Inventory items used to support production, supporting activities and customer service. Inventory velocity the speed at which components move through operations. Allows instant availability of items when customers want them: hedge inventory - form of inventory buildup against some event that may not happen. Ex: labor strikes, price increases, government issues : transportation inventory inventory that is in the pipeline moving in the supply chain, smoothing inventory used to smooth differences between upstream production levels and downstream demand. Company determines when is most productive and produces more at that moment. Smoothing allows individual links in the supply chain to stabilize their production at the most efficient level and to avoid the costs of changing workforce and production levels. Inventory drivers business condition that force companies to hold inventory. R reorder point d rate of decrease of inventory. Eoq minimizes holding costs and ordering costs for an item. Eoq does not account for volume discounts: reorder points and safety stock.
