marketing ch 9

Days of supply

- an estimate of how many days the firms current inventory will last; calculated by dividing the inventory on hand by the average daily usage or sales

Inventory carrying cost

- the costs required to make or buy a product, including risk of obsolescence, taxes, insurance, and warehousing space used to store the goods

Types of inventory

1. Cyclical inventory 2. Pipeline inventory 3. Anticipative stock 4. Seasonal stock 5. Obsolete inventory

Supply chain strategy

1. Push strategy 2. Pull strategy 3. Push pull strategy

Transportation Modes

1. Railroads 2. Trucks 3. Air transportation 4. Water transportation 5. Pipelines 6. Cyberspace

Warehouse functions

1. Storage 2. Movement 3. Production

Product allocation

Product allocation

Purchase order

a legal obligation to buy a certain amount of product at a certain price from a supplier to be delivered at a specified date

Just In time(JIT)

a manufacturing process that seeks to make products based on customer orders rather than in anticipation of orders and to receive components form suppliers only when they are needed for production

Supply chain

a set of three or more companies directly linked by one or more of the upstream and downstream flows of products services, finances, and information from a source to a customer

Stockout

a situation in which a company does not have enough inventory available to fill an order

Core carrier

a strategy in which a firm selects a small number of carriers as opposed to using a large number of different carriers

Push strategy

a supply chain strategy in which a company builds goods based on a sales forecast, puts those goods into storage, and waits for a customer to order the product

Pull strategy

a supply chain strategy in which customer orders drive manufacturing and distribution operations

Push pull strategy

a supply chain strategy in which the initial stages of the supply chain operate on push system, but completion of the product is based on a pull system

Distribution center(DC)-

a type of warehouse used specifically to store and ship finished goods to customers

Enterprise resource planning(ERP) system

data management systems that integrate information across all the departments of all organization

Contract carriers

for-hire truck companies that move goods exclusively for certain customers

Common carriers

for-hire truck companies that sell their services to any business

Product sortation

gathering goods with similar characteristics in one area of distribution center to facilitate proper inventory controls and effectively provide customer services

Distribution channel

intermediaries-wholesalers, distributors, and retailers- through which the flow of products travel.

1. Cyclical inventory

inventory a firm needs to meet average demand

5. Obsolete inventory

inventory that can no longer be sold because the product has expired, been redesigned, was over ordered, or is at the end of its product life

2. Pipeline inventory

inventory that is in transit between suppliers and customer

3. Anticipative stock

inventory that is produced or purchased when a company expects something to occur in the future that will negatively affect stock available

Product assortment

mixing goods coming from multiple suppliers into outgoing orders so that each order includes a variety of goods rather than just one type of good

Reciprocity

purchasing goods and services form suppliers only if they buy from the purchasing manager's company

Product allocation

receiving goods from various suppliers, storing the goods until they are ordered by a customer or other company-owned facility, and consolidating orders to achieve transportation economies of scale

Supply chain management

the actions the firm takes to coordinate the various flows within a supply chain

4. Seasonal stock

the goods a firm sells only at certain times of the year

Inventory turn

the number of times a firms entire inventory is sold and replaced; calculated by dividing the cost of goods sold by the company's average inventory

Logistics

the part of supply chain management the plans, implements, and controls the flow of goods, services, and information between the point of origin and the final customer

Intermodal transportation

using several types of transportation for the same shipment

Personal buying

when a purchasing manager buys items for the personal use of employees rather than for business use