Business Administration 3304K Study Guide - Final Guide: Safety Stock, Package Pilferage, Maximum Capacity
7 Apr 2019
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Setup cost = cost incurred in changing over an operation to produce a different component. Obsolescence = inventory that cannot be used at full value. Deteriorating = spoilage or damage to inventory. Decoupling inventory = held to accommodate different rates of patterns of production between two operations, allows economies of scale, allows production at maximum capacity (no constrained by the slowest process) Anticipation inventory = used to absorb uneven but predictable rates of demand or supply (ex. seasonality) Cycle inventory = portion of total inventory that varies directly with the lot size: average cycle time = q/2. Pipeline inventory = inventory moving from point to point in the materials flow system (orders that have been placed by not received) Economic order quantity = the lot size that minimizes the total annual inventory holding and ordering cost. Holding costs (average cycle inventory * unit holding cost) Setup costs (number of orders per year * order or setup cost)
