8/26 Chapter 9 ,11, 12

pallet positions

a calculation that determines the space needed for the number of pallets for inventory storage or transportation based on standard pallet size

fixed location storage

a method of storage in which a relatively permanent location is assigned for the storage of each item in a storeroom or warehouse. Although more space is needed to store parts than in a random location storage system, fixed become familiar and a locator file may not be needed.

distribution requirements planning

a system that forecasts when the various demands will be made by the system on central supply. Ability to respond to local demand and coordinate planning and control

radio-frequency identification (RFID)

a system using electronic tags to store data about items. Accessing these data is accomplished through a specific radio frequency and does not require close proximity or line-of-sight access for data retrieval.

owners equity

after all of the liabilities are paid, it represents what is left for the owners to pay

Gen. and Admin expenses

all other costs in running a business besides COGS

cost of goods sold (COGS)

costs that are incurred to make the product. They include: direct labor, direct material, and factory overhead.

liabilities

obligations/amounts owed by the company

cycle stock

the portion of inventory that depletes gradually as customers orders come in and is replenished cyclically when suppliers orders are received.

Capacity-associated costs

when output levels must be changes there may be costs for overtime, hiring, training, extra shifts, and layoffs.

hedge inventory

When prices for commodities fluctuate companies will purchase inventory when prices are low.

Income statement

a financial statement showing the net income for a business over a given period of time.

balance sheet

a financial statement showing the resources owned, the debts owed, and the owners share of a company at a given point in time

bar code

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

two-bin inventory system

a type of fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered when the first bin is empty. During the replenishment lead time the inventory in the second bin is used. Mostly used for "C" items

Transportation Inventories

exist because of the time needed to move goods from one location to another, such as from a plant to a distribution center. Sometime called pipeline or movement inventories

days of supply

how long in days, at the rate of anticipated demand, will it take for the current inventory level to reach zero or a set safety stock level.

carrying cost

include all expenses incurred by the firm because of the volume of inventory carried. As inventory increases, so do these costs. Capital costs: money invested in inventory Storage costs: space, workers, and equipment Risk: obsolescence, damage, deterioration

anticipation inventories

inventory built up in anticipation of future demand (ahead of peak selling season, promotion, vacation shutdown etc)

Safety stock

inventory carried to protect against stockouts and prevent disruptions in manufacturing or deliveries to customers.

decentralized inventory control

inventory decision making exercised at each stocking location for SKUs at that location

centralized inventory control

inventory decision making for all stockkeeping units exercised from one office or department for the entire company

fluctuation inventory

inventory held to cover random unpredictable fluctuations in supply and demand or lead time.

inventory turns

inventory turns= annual cost of goods sold/average inventory in dollars

lot-size inventory

items purchased or manufactured in quantities greater than needed immediately create lot-size inventories. This is to take advantage of quantity discounts, reduce shipping and other related costs.

capital

the amount of money the owners have invested in the company

ABC classification system

the classification of different groups of items in decreasing order of annual dollar volume or other criteria. 80-20 rule

stockout

when demand or lead time is greater than forecast

order point

when the quantity of an item on hand in inventory falls to a predetermined level