supply chain chapter 4

Continuous Review System

Inventory levels are continuously reviewed

Periodic Review System

Inventory levels are reviewed at a set frequency , e.g., weekly, monthly

Maintenance, Repair and Operating (MRO)

Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations

Raw Materials

Purchased items or extracted materials that are converted via the manufacturing process into components and products

Reorder Point (ROP)

The lowest inventory level at which a new order must be placed to avoid a stockout

Inventory Turnover

The number of times that an inventory cycles, or "turns over," during the year

Linear (1D) Bar Codes

a series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers

Base Stock Level Inventory System

a type of inventory system that issues an order whenever a withdrawal is made from inventory

Carrying

costs for physically having inventory on-site and for maintaining the infrastructure needed to store the inventory and to secure and insure it over time

Purpose of inventory

necessary to maintain operations and ensure that products are available when customers demand them

Constraints on the Practical use of EOQ

need definition

Inventory Management

to help a company be more profitable by . Lowering the cost of goods . and/or by . Increasing sales

The Economic Order Quantity (EOQ) Model

A quantitative decision model based on the trade-off between annual inventory carrying costs and annual order costs

Safety Stock

A quantity of stock planned to be in inventory to protect against fluctuations in demand or supply

Service Inventory

Activities carried out in advance of the customer's arrival

Cycle Stock

Inventory that a company builds to satisfy its' immediate demand

A barcode reader (or barcode scanner)

an electronic device that can read barcodes and transmit the data to a computer

Variable

dependent on the unit volume produced vary with output level (e.g., materials, labor, utility power, etc.)

Fixed Cost

(aka Sunk Costs) - independent of the unit volume produced (e.g., buildings, equipment, rent, allocated overhead costs, etc.)

Work in Process

A good or goods in various stages of completion throughout the plant, from raw material up to fully processed material awaiting final inspection and acceptance as finished goods

Strategic Stock

Additional inventory beyond cycle and safety stock, generally used for a specific purpose or future event, and for a defined period of time

ABC inventory system

An ABC system classifies inventory based the degree of importance A: most important B: C: least important

Radio Frequency Identification (RFID)

Does not require a direct line of sight, automates the supply chain

Fixed-Order Quantity System

If the review determines that an order should be placed, then the order for a pre-defined quantity for that item is placed

Fixed-Time Period System

Inventory is checked in fixed time periods against a target inventory level. If the inventory is less than target, a quantity necessary to bring inventory back up to the target level is ordered.

Obsolete Inventory

Inventory items that have . Met the obsolesence criteria established by the company

Bin Inventory System

Inventory system that uses either one or two bins to hold a quantity of the item being inventoried

Pipeline Inventory

Inventory that is already out in the market being held by wholesalers, distributors, retailers, and even consumers

Fixed - Time Period System

The order quantity is the difference between the on-hand stock on the review day, and the pre-determined target inventory level

Absolute Inventory Value

The value of the inventory at either its cost or its market value

Finished Goods

Those items on which all manufacturing operations, including final testing, have been completed. These products are available for sale and/or shipment to the customer

"Single-Period" Inventory Model

a type of inventory system in which inventory is only ordered for a one-time stocking

2D Bar Codes

are a graphical image that stores information both horizontally and vertically

Indirect Cost

cannot be traced directly to the unit produced (e.g., overhead; MRO items, buildings, equipment, etc.)

Direct Cost

directly traceable to unit produced (e.g., materials, labor, etc.)

Facilitating Goods

items that are used to help facilitate the service being provided.

Order

labor costs associated with placing an order for inventory and the cost of receiving the order