GMS 200 Lecture Notes - Lecture 9: Lead Time, Fixed Cost, Carrying Cost

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 200
• Professor: Amirmohsen Behjat

Document Summary

Stock of items kept to meet future demand. Importance of inventory management: approximately 50% of a company"s assets, most of the financial metrics for the performance of the company is affected by it. (roa, Cogs, ): plays a great role in the profitability of a company. A function of cycle time for a product: finished goods. Completed product awaiting shipment: spare parts, tools & supplies. Necessary to keep machinery and processes productive. Functions of inventory: to wait while being transported, to protect against stock-outs, take advantage of economic lot-size and quantity discounts, to smooth seasonal demand or production, to decouple operations. Order-up-to model: perpetual (or continual) tracking. Two bin system: divides inventory into three classes based on annual dollar volume. Class c - low annual dollar volume: used to establish policies that focus on the few critical parts and not the many trivial ones.