COMMERCE 4OB3 Chapter 12&15: 2OC3 - Chapter 12&15.docx
31 Mar 2015
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Types of inventory: raw material inventory: materials purchased but have yet to enter manufacturing process, work in process (wip) inventory: products that are not raw materials but not finished products, wip exists because of time it takes for product to be made (cycle time, mro: inventories devoted to maintenance/repair/operating supplies, finished goods inventory: end item ready to be sold. Idea is to establish inventory policies that focus resources on the few critical inventory parts and not the trivial ones: should not monitor inexpensive items with the same intensity as very expensive items, class a items, annual dollar volume is high, may represent only 15% of inventory but 70 80% of dollar usage, class b items, medium annual dollar volume, represent 30% of inventory items and 15 25% of total value, class c items, low annual dollar volume, 55% of inventory items but 5% of annual dollar volume.
