GMS 401 Chapter Notes - Chapter 12: Economic Order Quantity, Universal Product Code, Radio-Frequency Identification

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 401
• Professor: Sam Lampropoulos

Document Summary

Inventory- idle material or product, usually in a warehouse or storeroom. Importance of inventory one widely used measure of business performance is return on investments, which is profit after taxes divided by total assets. Inventories can may represent a huge part of total assets reduction in inventories can increase roi. Functions on inventory: to wait while being transported. Raw materials and part from suppliers, and finished goods from manufacturers heading to markets need to be transported: to protect against stock-outs. Delayed deliveries and unexpected increases in demand increase the risk of stock-outs or shortages. Rick of shortage can be reduced by safety stock- stocks in excess of average demand to compensate for variabilites in demand and delivery lead time: to take advantage of economic lot size and quantity discount. Minimize purchasing, receiving, material handling, and accounts payable, an organization often buys in quantities to exceed their immediate requirements.