AS Business - Inventory management

Inventory

materials and goods held by a business and required to allow for the production of products and their supply to the customers

Inventory management

the process of ordering, storing, and using a company's inventory

Economic order quantity (EOQ)

the optimum quantity or least-cost quantity of stock to re-order taking into account delivery costs and stock-holding costs

Buffer inventories

Minimum inventory level that should be held to ensure that continuous production is possible should delivery days occur or output increase

Re-order quantity

number of units ordered each time

Lead time

The time between ordering new supplies and their delivery

Re-order level

The level of inventory that triggers a new order to be sent to suppliers

Supply chain

The network of all the business activities involved in creating a product for sale, starting with delivery of raw materials and finishing with the delivery of the finished product

Supply chain management

handling the entire production flow of a product (from a raw material to finished product) to minimise costs but improve customer service

Just-in-time (JIT) inventory management

aims to avoid holding inventories by requiring supplies to arrive just as they are needed in production and completed products are produced to order

Just-in-case (JIC) inventory management

aims to reduce the risk of running out of inventory to the minimum by holding high buffer inventory levels