Principles of Finance · free preview
Inventory Management
Inventory management balances carrying costs against stockout costs through economic order quantity logic, ABC classification, and just-in-time systems, finishing the working capital cycle the module has been managing.
1. The inventory cost trade-off
The inventory cost trade-off
2. The EOQ worked
The EOQ worked
3. ABC classification
ABC classification
4. Just-in-time and modern systems
Just-in-time and modern systems
5. The two great costs
Which two costs does inventory management balance?
6. The EOQ's trade-off
What two costs does the economic order quantity balance within the carrying decision?
7. The EOQ computation
A firm uses 10,000 units a year, ordering costs 50 dollars per order, carrying costs 4 dollars per unit per year. Approximately what is the EOQ?
8. The reorder point's parts
What sets a firm's inventory reorder point?
9. The service level's role
How does the desired service level size the safety stock?
10. JIT's release and risk
What does just-in-time inventory management trade off?
11. The lot size's formula name
What three-letter abbreviation names the order quantity that minimizes ordering plus carrying costs? Write the abbreviation.
12. The Pareto classes
What letter names the inventory class, few in number but carrying most of the value, that receives tight control? Write the letter.
13. The trigger level's name
What two-word term names the inventory level at which a new order is placed? Answer in lowercase.
14. The buffer stock's name
What two-word term names the inventory buffer held against demand uncertainty? Answer in lowercase.
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