Management and Organizational Studies 3330A/B Chapter Notes -Grocery Store, Economic Production Quantity, Fixed Cost

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3330A/B
• Professor: May Tajima

Document Summary

Inventory: a stock of items or materials held to satisfy eventual demand: raw materials, purchased parts and supplies, work in progress products, finished goods, rework items, tools, machinery, and equipment, labour. Meet demand forecast (e. g. seasonality: safety stock. Result of batch ordering: pipeline inventory. To protect against future events (e. g. price increase of raw materials: maintenance, repair, and operating (mro) inventory. To support general operations and maintenance: decoupling. Work in process items waiting for the next step. Why keep inventory: buffer against expected and unexpected changes, faster customer service, economics of scale (production, purchasing, not to be dependent on suppliers. Why is too much inventory bad: cost, need for storage space, need for labour, complacency. General objective: to keep enough inventory to meet customer demand and be cost efficient. Main operational concern: when to order and how many to order. Reorder when a fixed quantity (q) whenever the inventory falls to or below a reorder point.