Inventory Management and Risk Pooling - Introduction
7 important questions on Inventory Management and Risk Pooling - Introduction
In what ways can inventory appear in the supply chain?
- Raw material
- Work-in-progress (WIP) inventory
- Finished product inventory
Why is inventory held? Name four reasons.
- Unexpected changes in customer demand
- The presence in many situations of a significant uncertainty
- Lead times
- Economies of scale offered by transportation companies
Why is customer demand uncertainty increased?
- The short life cycle of an increasing number of products
- The presence of many competing products in the marketplace
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What are the two critical issues in inventory management and demand forecasting?
- What to order
- When to order it
What is an inventory policy?
What are order costs?
What are inventory holding costs?
- State taxes, property taxes, and insurance on inventories
- Maintenance costs
- Obsolescence cost
- Opportunity costs
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