33:799:301 Lecture Notes - Lecture 8: Safety Stock, Inventory Turnover, Income Statement

• School: Rutgers University
• Department: Supply Chain Management
• Course: 33:799:301
• Professor: D Klepacki

Document Summary

Dollar amount of inventory = signi cant to a company b/c it takes up large portion of its balance sheet. Inventory = goods & materials that are in stock (has 4 categories: largest asset of an organization, too much inventory can be a liability too. Holding too much inventory ties up capital that can otherwise be used for other purposes (i. e. : r&d, marketing, sales, etc. : there are many carrying costs for holding & managing inventory. Can pose as a liability if it becomes unusable due to expiration, damage, etc. Raw materials: items/materials that you purchase from suppliers that will eventually be converted into products; delivered just in time when its needed. Work-in-process: value is created as materials are transformed into nished goods. Finished goods: items on which all manufacturing operations have been completed (available for sale to customers: make-to-order: customers have speci c requests for a customized item, make-to-stock: all about quantity & volume; items are mass commercialized.