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19 Cards in this Set

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What does this Variable stand for?
Q
Order quantity
(# of pieces per order)
What does this Variable stand for?
D
Demand for the time period considered
(units/time period)
What does this Variable stand for?
S
Setup/order cost
($/Order)
What does this Variable stand for?
H
Holding Cost
What does this Variable stand for?
I
Interest Rate
(%/time period)
What does this Variable stand for?
P
Unit Cost
($/unit)
What does this Variable stand for?
IC
inventory cost
S+H
setup+holding costs
What does this Variable stand for?
TC
setup cost * # of orders
+ holding cost * average Q
+ P*D
What does this Variable stand for?
EOQ
sqrt(2DS/H)
what is independant demand
from customer side, Smooth
(end items and finished goods)
car
what is dependant demand
derived demand, lumpy
(subassemblies and components)
car parts
What is the objective of inventory systems
to minimize total inventory cost and maintain satisfied service level
what types of inventories are there?
Raw materials
in-process goods(WIP)
finished goods
supplies
what are the inventory related costs?
holding cost
shortage cost
order cost
Average Inventory Level=
Q/2
the amount you get per order is the most you can have.
Annual Holding Cost=
H*Q/2
holding cost/unit/time times the average inventory level
Number of Orders per year=
D/Q
total demand for the year, divided by the # of units per order
Annual order Cost=
S*D/Q
orders per year times order/setup cost
Total Cost (TC)=
P*D + S*D/Q + H*Q/2
total unit cost plus annual order cost plus annual holding cost