GMS 401 Study Guide - System Model, Railways Act 1921, Warehouse Management System

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Inventory: an idle material or product, usually in a warehouse or storeroom and kept for use or sale in the future. One widely used measure is r. o. i. (return on investment): This is profit after taxes divided by total assets. Since inventories likely represent a significant portion of total assets, A reduction in inventories can represent a significant increase in r. o. i. Functions (purpose) of inventories: to wait while being transported. Raw materials and parts from suppliers, and finished goods from manufacturers heading to markets need to be transported. Depending on the method of transportation and the destination itself it could take the freight months to arrive. Items being transported are called in-transit inventory: to protect against stock outs. Risk of shortage can be reduced by safety-stock, which are stocks in excess of average demand to compensate for variability"s in demand and delivery lead- time. If supplier delivery is delayed: e. o. q. "s and quantity discounts.