BU395 Lecture Notes - Lecture 5: Inventory Turnover, Purchase Order, Economic Order Quantity
Document Summary
Inventory an idle material, part, or product, usually in a warehouse or stockroom. Inventory turnover ratio of annual cogs to average inventory investment, indicates how many times a year the inventory is sold or used, the higher the ratio the better. Inventory managers are required to perform the following activities: 1. ) safely store and handle inventories - Inventory position quantity on hand + on order backordered. Fixed-interval/order up to level model orders are placed at fixed time intervals to bring the inventory position up to the order up to level. Perpetual or continual tracking keeps track of removals from and additions to inventory continuously, thus providing the current inventory position of each item. Fixed order quantity/reorder point model an order of a fixed size is placed when the inventory position drops to or below a minimum quantity called to reorder point.