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Inventory ManagementCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
13-2You should be able to:LO 13.1Define the term inventoryLO 13.2List the different types of inventoryLO 13.3Describe the main functions of inventory LO 13.4Discuss the main requirements for effective managementLO 13.5Explain periodic and perpetual review systemsLO 13.6Describe the costs that are relevant for inventory managementLO 13.7Describe the A-B-C approach and explain how it is usefulLO 13.8Describe the basic EOQ model and its assumptions and solve typical problemsLO 13.9Describe the economic production quantity model and solve typical problemsLO 13.10Describe the quantity discount model and solve typical problemsLO 13.11Describe reorder point models and solve typical problemsLO 13.12Describe situations in which the fixed-order interval model is appropriate and solve typical problemsLO 13.12Describe situations in which the single-period model is appropriate, and solve typical problems
13-3InventoryA stock or store of goodsIndependent demand itemsItems that are ready to be sold or usedInventories are a vital part of business: (1) necessary for operations and (2) contribute to customer satisfactionA “typical” firm has roughly 30% of its current assets and as much as 90% of its working capital invested in inventoryLO 13.1
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