Chapter 14 (2)

just-in-time (JIT) system

inventory management technique that minimizes inventory investment by having materials arrive at exactly the time they are needed for production

materials requirement planning (MRP) system

inventory management technique that applies EOQ concepts and uses a computer to compare production needs to available inventory balances and determine when orders should be placed for various items on a product’s bill of materials

manufacturing resource planning II (MRP II)

an extension of MRP that uses a sophisticated computerized system to integrate data from numerous areas such as finance, accounting, marketing, engineering, and manufacturing and generate production plans as well as numerous financial and management reports

enterprise resource planning (ERP)

a computerized system that electronically integrates external information about the firm’s suppliers and costumers with the firm’s departmental data so that information on all available resources – human and material – can be instantly obtained in a fashion that eliminates production delays and controls costs

credit standards

the firm’s minimum requirements for extending credit to a costumer

5 C’s of credit

the 5 key dimensions – character, capacity, capital, collateral and conditions – used by credit analysts to provide a framework for in-depth credit analysis

credit scoring

a credit selection method commonly used with high-volume/small-dollar credit requests; relies on a credit score determined by applying statistically derived weights to a credit applicant’s scores on key financial and credit characteristics

credit terms

the terms of sale for costumers who have been extended credit by the firm

early payment discount

a percentage deduction from the purchase price; available to the credit customer that pays its account within specified time

early payment discount period

the nr of days after the beginning of the credit period during which the discount is available

credit period

the nr of days after the beginning of the credit period until full payment of the account is due

credit monitoring

the ongoing review of a firm’s accounts receivable to determine whether costumers are paying according to the stated credit terms

aging schedule

a credit-monitoring technique that breaks down accounts receivable into groups on the basis of their time of origin; it indicates the percentages of the total accounts receivable balance that have been outstanding for specified periods of time