SCHM 2301 Lecture Notes - Safety Stock, Stockout, Carrying Cost
4 Jun 2014
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Document Summary
In transit- being shipped (not available for expected demand or unexpected demand. Inventory policies affect cost directly and revenue only indirectly. Demand rate: demand size per unit of time. Demand pattern: how units are withdrawn from inventory. Replenishment size: quantity of order received into inventory. Replenishment pattern: how units are added to inventory. Replenishment lead-time: length of time between decision to replenish item and its actual. Independent demand inventory systems: used when the demand for an item is exogenous. Dependent demand inventory systems: used when the demand for an item is derived from the. Theoretically there is an optimum level of inventory. Continuous review model: inventory is constantly monitored to decide when a replenishment order needs to be placed. Permits real-time updates of inventory counts, allowing for accurate identification of when to reorder items to replenish inventory and accurate accounting.
