SCM 301 Chapter Notes - Chapter 11: Standard Deviation, Opportunity Cost, Stockout
Document Summary
Inventory: according to apics, those stocks or items used to support production (raw materials & wip items), supporting activities (maintenance, repair, & operating supplies), and customer service (finished goods & spare parts) To provide a safeguard for variation in raw material delivery time. Take advantage of quantity discounts (economic purchase order size) Cycle stock: products received in bulk by a downstream partner, gradually used up, and then replenished again by the upstream partner. Safety stock: extra inventory that companies hold to protect themselves against uncertainties in demand or replenishment time; buffer of protection. Anticipation inventory: inventory bought and held in anticipation for large customer demand anticipation for large customer demand. Hedge inventory: used to buffer against some event that may not happen. Transportation inventory: inventory that is currently moving from one link in the supply chain to another. Smoothing inventory: inventory that is used to smooth out the differences between upstream production and downstream demand; match demand and production.
