GMS 401 Chapter Notes - Chapter 10: Pareto Principle, Operations Management, Personnel Selection

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 401
• Professor: Payman Ahi

Document Summary

One of the most expensive assets of many companies representing as much as 50% of total invested capital. The objective of inventory management is to strike a balance between inventory investment and customer service. Operations management must balance inventory investment and customer satisfaction. Inventory functions that add exibility to a rms operations include: 1. to decouple or separate various parts of the production process. 2. to decouple the rm from uctuations in demand and provide a stock of goods that will provide a selection for customers. 3. to take advantage of quantity discounts, because purchases in larger quantities may reduce the cost of goods or their delivery. 4. to hedge against in ation and upward price changes. >purchasing larger than normal amounts to avoid future known price increase. To accommodate the functions of inventory, rms maintain four types of inventories: (1) raw material inventory (2) work in process inventory (3) maintenance/repair/operating supply (mro) inventory, (4) nished goods inventory.