SCHM 2301 Chapter Notes - Chapter 7: Global Trade Item Number, Capacity Utilization, Vendor-Managed Inventory
22 Mar 2016
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Document Summary
Inventory is a supply of items held by a firm to meet demand: internal and external demand. Raw materials bought from suppliers used in production. Work in process materials in the process of being made into products. Finished goods inventory that is ready to be sold to the customer. Mro inventory maintenance, repair and operating suppliers: includes office supplies. Transit inventory consists of items that are in the process of being transported. (cid:1) Balancing supply and demand: inventory is used to satisfy demand when it is not being produced, allows firms to deal with seasonality efficiently. Buffering uncertainty in demand or supply: exact future demand and daily demand can never be determined, buffer stock inventory held to guard against uncertainty in demand or supply. Enabling economies of buying: ability to achieve discounts on large orders, buy more now to deal with a possible future increase in price or a shortage.
