What are the two fundamental questions asked in inventory management?
When to oder (trigger), how much to order.
What are the 4 costs?
Setup (admin costs), stockout cost (not enough, customers leave), holding cost (opportunity cost, storage space et.), material costs (discount on the per unit cost).
What are the two types of inventory systems?
Periodic, continous
What are the two options when ordering?
Fixed or varies (when and how much (fixed, periodic, varied continuous)
What is fast usage recording?
Press button shelf every time you take something, constant tracking.
What is backflushing?
Record product was completed, replaces all parts in product.
What are some setup costs?
Purchasing analysis, receiving, inspection (from outside company). Production setup cost, clerical (from inside company).
How is holding cost expressed?
As a percentage of the cost of an item.
What is the economic order quantity?
How much to order under stable, known conditions.
What does the economic order quantity do?
Balance the setup cost and the holding cost.
What are some considerations when it comes to inventory management?
Data quality, Employee skill, Which ai? the risk, and the payback
What does C stand for?
Unit cost
What does Q stand for?
Order quantity
What does C*Q do?
Gives you cost for total amount
What does H stand for?
Holding cost
How do you determine average inventory?
Q/2
What does S stand for?
Setup cost, or order cost
What does the EOQ formula stand for?
How much to order
What is the EOQ formula?
Q=Sqrt((2DS)/H)
What does the R=dl formula Stand for?
When to order
What does d stand for?
Daily Average demand level
What does L stand for?
Replenishment lead times
What are some limitations to EOQ?
No demand uncertainty, no supply uncertainty, stockout cost is ignored.
How can we solve the problems in EOQ?
Safety stock
