COMM 441 Study Guide - Final Guide: Vendor-Managed Inventory, Master Production Schedule, Demand Forecasting

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6 Feb 2013
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Purchase order minimums - vendors can set order minimum quantities to avoid the high cost of handling small orders. This will usually force some inventory into the system. Part period cost balancing - the economically best order quantities can be set by balancing the cost of processing an order with the cost of carrying the inventory associated with ordering more than what is immediately needed. Part-period - find the average inventory in each week. Average inventory is (beginning inventory ending inventory)/2, where beginning inventory is scheduled receipts quantity on hand. Work as a team take cares of the customers multiple sources compete with each other. Internal - demand shifts; product/service changes; late deliveries; incomplete shipments. External - supply shortages; engineering changes; new product/service introductions; product/service promotions; Remedies - centralize demand forecasting; improve forecasting accuracy; reduce lead-time uncertainties throughout the channel; smooth response to change.

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