GMS 401 Chapter Notes - Chapter 9: Economic Order Quantity, Opportunity Cost, Quality Costs

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 401
• Professor: Wally Whistance- Smith

Document Summary

Stock of items kept to meet future demand. Decisions of inventory management: how many units to order, when to order. To achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds. Level of customer service (not understock) fill rate. Costs of ordering and carrying inventory (not overstock) inventory turnover. Reasonable estimates of: holding (carrying) costs: cost to carry an item in inventory for a length of time, usually a year, ordering costs: costs of ordering and receiving inventory, shortage costs: costs when demand exceeds supply. Warehouse management system (wms): computer software that controls the movement and storage of materials within a warehouse, and processes the associated transactions. Periodic counting: physical count of items made at periodic intervals. Perpetual (or continual) tracking: keeps track of removals from and additions to inventory continuously, thus providing current levels of each item.