MGSC 395 Lecture Notes - Lecture 10: Inventory Turnover
11 Dec 2017
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= (# units item a)*( of an item a) + (# units of item b)*( of an item. Tells us how much of an organization"s assets are tied up in inventory weeks of supply. Tells us how long inventory is staying in the organization. Tells us how frequently an organization is turning inventory into sales. Operating policy of 50 work weeks a year. Weeks of supply = 65,000/(5,000,000/50) = 0. 65 weeks. Every 3 days, inventory will turn into sales. Inventory is turned into sales 77 times per year. Disadvantage: increased safety stock to compensate for uncertain demand. Build to stock (inventory): make inventory and then customers will purchase. Assemble to order: custom, wait until order is received and then make it. Make to order: some manufacturing activity is going on, but not necessarily compiling parts into final product until order is placed.
