MGT 3501 Lecture Notes - Lecture 12: Cash Flow, Opportunity Cost
Document Summary
Inventory is the raw material, components, work in process, or finished goods that are held at a location in the supply chain. Inventory management system is the set of policies and controls that monitor levels of inventory. Determines what levels should be maintained, when stock should be replenished, and how large orders should be. If work stations are dependent on each other, then the output of one can directly impact the other workstations, so we want to have buffer. If the demand of one product goes up, we want to be able to meet the demand, so we can pull from inventory. If the machines go down, want to be able to have inventory to pull from. If the suppliers are late, there"s inventory to pull from to not affect our process. The more ordered, the lower the price. Too much variability (supply chain, process, demand, etc. ) There"s no way for a company to survive without inventory.
