Operations management simulation inventory basics answers

QUESTIONS FOR SIMULATION REFLECTIVE REPORT- INVENTORY BASICS (word limit 750 (+/- 10%) 1- What strategy did you use in replenishment of Adjustable Wrench? Please discuss and refer to your simulation results. What strategy did you use in replenishment
Subject
Business Finance

School
University

Question Description
I have all the information needed plus past examples and notes so you can understand the process of the assessment better.Inventory Management Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. You should be able to: LO 13.1 LO 13.2 LO 13.3 LO 13.4 LO 13.5 LO 13.6 LO 13.7 LO 13.8 Define the term inventory List the different types of inventory Describe the main functions of inventory Discuss the main requirements for effective management Explain periodic and perpetual review systems Describe the costs that are relevant for inventory management Describe the A-B-C approach and explain how it is useful Describe the basic EOQ model and its assumptions and solve typical problems LO 13.9 Describe reorder point models and solve typical problems LO 13.10 Describe situations in which the fixed-order interval model is appropriate 13-2  Inventory  A stock or store of goods  Independent demand items  Items that are ready to be sold or used Inventories are a vital part of business: (1) necessary for operations and (2) contribute to customer satisfaction A “typical” firm has roughly 30% of its current assets and as much as 90% of its working capital invested in inventory Instructor Slides 13-3 13-3  Raw materials and purchased parts  Work-in-process (WIP)  Finished goods inventories or merchandise  Tools and supplies  Maintenance and repairs (MRO) inventory  Goods-in-transit to warehouses or customers (pipeline inventory) Instructor Slides 13-4 13-4  Inventories serve a number of functions such as: 1. To meet anticipated customer demand 2. To smooth production requirements 3. To decouple operations 4. To protect against stockouts 5. To take advantage of order cycles 6. To hedge against price increases 7. To permit operations 8. To take advantage of quantity discounts LO 13.3 13-5  Inventory management has two main concerns: 1. Level of customer service  Having the right goods available in the right quantity in the right place at the right time 2. Costs of ordering and carrying inventories  The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds 1. Measures of performance 2. Customer satisfaction  Number and quantity of backorders  Customer complaints 3. Inventory turnover Instructor Slides 13-6 13-6  Management has two basic functions concerning inventory: Establish a system for tracking items in inventory 2. Make decisions about 1.  When to order  How much to order  Effective Inventory Management Requires: 1. A system keep track of inventory 2. A reliable forecast of demand 3. Knowledge of lead time and lead time variability 4. Reasonable estimates of holding costs, ordering costs, shortage costs and A classification system for inventory items Instructor Slides 13-7 13-7  Periodic System  Physical count of items in inventory made at periodic intervals  Perpetual Inventory System  System that keeps track of removals from inventory continuously, thus monitoring current levels of each item  An order is placed when inventory drops to a predetermined minimum level  Two-bin system  Two containers of inventory; reorder when the first is empty Instructor Slides 13-8 13-8  Universal product code (UPC)  Bar code printed on a label that has information about the item to which it is attached  Radio frequency identification (RFID) tags  A technology that uses radio waves to identify objects, such as goods, in supply chains LO 13.5 13-9  Forecasts  Inventories are necessary to satisfy customer demands, so it is important to have a reliable estimates of the amount and timing of demand  Point-of-sale (POS) systems  A system that electronically records actual sales  Such demand information is very useful for enhancing forecasting and inventory management  Lead time  Time interval between ordering and receiving the order Instructor Slides 13-10 13-10  Purchase cost  The amount paid to buy the inventory  Holding (carrying) costs  Cost to carry an item in inventory for a length of time, usually a year  Ordering costs  Costs of ordering and receiving inventory  Setup costs  The costs involved in preparing equipment for a job  Analogous to ordering costs  Shortage costs  Costs resulting when demand exceeds the supply of inventory;