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24 Cards in this Set
- Front
- Back
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Inventory
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A stock or store of goods
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Little's Law
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The average amount of inventory in a system is equal to the product of the average demand rate and the average time a unit is in the system.
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Inventory turnover
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Ratio of average cost of goods sold to average inventory management.
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Periodic system
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Physical count of items in inventory made at periodic intervals (weekly, monthly).
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Perpetual inventory system
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System that keeps track of removals from inventory continuous, thus monitoring current levels of each item.
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Two-bin system
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Two containers of inventory; reorder when the first is empty.
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Universal product code (UPC)
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Bar code printed on a label that has information about the item to which it is attached.
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Lead time
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Time interval between ordering and receiving the order.
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Point-of-sale (POS) system
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Record items at time of sale.
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Holding (carrying) cost
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Cost to carry an item in inventory for a length of time, usually a year.
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Ordering costs
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Costs of ordering an receiving inventory.
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Shortage costs
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Costs resulting when demand exceeds the supply of inventory; often unrealized profit per unit.
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A-B-C approach
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Classifying inventory according to some measure of importance, and allocating control efforts accordingly.
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Cycle counting
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A physical count of items in inventory.
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Cycle counting
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A physical count of items in inventory
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Economic order quantity (EOQ)
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The order size that minimizes total annual cost.
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Quantity discounts
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Price reductions for large orders.
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Reorder point (ROP)
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When the quantity on hand of an item drops to this amount, the item is reordered.
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Safety stock
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Stock that is held in excess of expected demand de to variable demand and/or lead time.
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Fill rate
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The percentage of demand filled by the stock on hand.
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Fixed-order-interval (FOI) model
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Orders are placed at fixed time intervals.
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Single-priced model
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Model for ordering of perishables and other items with limited useful lives.
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Shortage cost
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Generally, the unrealized profit per unit.
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Excess cost
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Difference between purchase cost and salvage value of items left over at the end of a period.
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