OM 300 Lecture Notes - Lecture 12: Economic Order Quantity, Carrying Cost, Lead Time

• School: University of Alabama
• Department: Operations Management
• Course: OM 300
• Professor: David Cooper

Document Summary

Inventory management: the objective of inventory management is to strike a balance between inventory investment and customer service. Importance of inventory: one of the most expensive assets of many companies representing as much as 50% of total invested capital, operations mangers must balance inventory investment and customer service. A function of cycle time for a product: maintenance/repair/operating (mro) Necessary to keep machinery and process productive: finished goods. Managing inventory: how inventory items can be classified, how accurate inventory records can be maintained, divides inventory into three classes based on annual dollar volume. Class a high annual dollar volume. Class b medium annual dollar volume. Class c low volume dollar volume many trivial ones: used to establish policies that focus on the few critical parts and not the, other criteria than annual dollar volume may be used. High unit cost: policies employed may include. More emphasis on supplier development for a items. Tighter physical inventory control for a items.