Inventory Management
Terms
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- What is inventory turnover?
- Ratio of average cost of goods sold to average inventory investment.
- What is a periodic system?
- Physical count of items in inventory made at periodic intervals.
- What is a perpetual inventory system?
- System that keeps track of removals from inventory continuously, thus monitoring current levels of each item.
- What is a two-bin system?
- Two containers of inventory; reorder whent eh first is empty.
- What is a universal product code?
- Bar code printed on a label that has informationa bout the item to which it is attached.
- What is lead time?
- Time interval between ordering and receiving the order.
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What is a point of sale (POS)
system? - Method for electronically tracking sales and inventory.
- What is holding(carrying) cost?
- Cost to carry an item in inventory for a length of time, usually a year.
- What is ordering costs?
- Costs of ordering and receiving inventory.
- What is shortage costs?
- Costs resulting when demand exceeds the supply of inventory on hand; oft\etn unrealized profit per unit.
- What is cycle counting?
- A physical count of items in inventory.
- What is EOQ?
- Economic order quantity is the order size that minimizes total cost.
- What is quantity discounts?
- Price reductions for large orders.
- What is safety stock?
- Stock that is held in excess of expected demand due to variable demand rate.
- What is service level?
- Probability that demand will not exceed supply during lead time.
- What is fixed-order-interval (FOI) model?
- Orders are placed at fixed time intervals.
- What is single-period model?
- Model for ordering of perishablees and other items with limited useful lives.
- What is the shortage cost?
- Generally, the unrealized profit per unit.
- What is the excess cost?
- Differences between purchase cost and salvage value of items left over at the end of the period.