inventory control models to determine how much to order or produce and when to order or produce. 3. Understand inventory models that allow quantity discounts. 4. Understand the use of safety stock with known and unknown stockout costs. 5. Understand the importance of ABC inventory analysis. 6. Use Excel to analyze a variety of inventory control models. CHAPTER 12.1 12.2 12.3 12.4 12.5 12.6 Introduction OUTLINE 12.7 12.8 12.9 Quantity Discount Models Use of Safety Stock ABC Analysis
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The Expenditure Cycle is a recurring set of business activities and related information processing operations associated with the purchase of and payment for goods and services. The primary external exchange of information is with suppliers (Vendors). Information about the need to purchase goods and material flows to the expenditure cycle from the revenue and production cycles‚ inventory control‚ and various departments. Once the goods and materials arrive‚ notification of their receipt flows
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smooth production requirements: Seasonal inventories To decouple operations: Buffer inventories To protect against stock-outs: Safety stock – uncertainty To take advantage of order cycles: Cycle stock - batch To help hedge against price increases To permit operations: Work-in-process‚ pipeline inventories To take advantage of quantity discounts Inadequate Control of Inventories Inadequate control of inventories can result in both under- and overstocking of items. Understocking (too few) results in
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Economic Order Quantity vs. Just-in-time Inventory Models Bettina Bradshaw Susan Day Tameka S. Levy Accounting April 20‚ 2011 There are several models that have been developed to deal with the trade-off between ordering and carrying costs of inventory. The two that will be discussed is the Economic Order Quantity (EOQ) model and the Just-in-time (JIT) model. First‚ the history and definition of the theories will be discussed. Secondly‚ there will be a comparison of these two models presented
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Assignment 3 Q:Difference between different types of EOQ. Economic Order Quantity: The economic order quantity (EOQ) is the fixed order quantity (Q) that minimizes the total annual costs of placing orders and holding inventory (TC). This type of model is used when i) Demand is independent. ii) Compute how much to order. Economic Production Quantity: The economic production quantity (EPQ) is the production quantity (lot size) that minimizes the total annual cost of setups and holding
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the strategies for managing inventories critically exploit these characteristics. The first two characteristics of a forecast emphasize the need to estimate the variability of demand in addition to its mean. Building up on the examples of economic order quantity model in chapter 6‚ we discuss the notion of stock-outs (when demands become uncertain)‚ introduce the cycle service level measure‚ and derive the safety stock as a buffer against uncertain demand to provide a certain service level. The key
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Component 0.16 0.09 0.01 Reliability 0.84 0.91 0.99 Sys Reliability 0.757 Table C.1 Optimal Inventory for Shoelaces Inventory Economic Order Quantity Model Data Demand rate‚ D 300000 Setup/order cost‚ S 125 Holding cost‚ H 0.1 Unit Price‚ P Results Optimal Order Quantity‚ Q* 27386.13 Maximum Inventory 27386.13 Average Inventory 13693.06 Number of Orders 10.95 Holding cost $1‚369.31 Setup cost $1‚369.31 Unit costs $0.00 Total cost‚
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Executive summary The purpose of this assignment is focusing on explain how P & G ensure that the regular quantities and quality of goods (inventory) and services are purchased and explain the role of the major national and transnational organizations and agencies which influence international purchasing. In order to explain correctly and accurately‚ we have to do a research on P&G and gain our understanding and realization‚ especially their purchasing function
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. Inventory control is a supervision of the supply and storage and accessibility of items in order to insure anadequate supply without excessive oversupply. It can also be referred as internal control - an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc. Inventory is defined as itemized list of goods with their estimated worth ‚specifically annual account of stock taken
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currently running at 2% of cost. Joe pays his secretary/bookkeeper $7.50 per hour. Joe’s secretary can place an order in 15 minutes with materials and overhead cost of $15.00 per order. Records show‚ weekly pizza sales as follows: Weekly Pizza Sales Week Sales(units) 1 475 2 515 3 525 4 500 5 485 2 a. How many units should Joe order? b. How often should Joe place each order? c. What is the minimum TIC? 3 Suppose R & B Beverage Company has a soft-drink product that has a constant
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