Clik here to view.
What is the Inventory cost structure
Now we know that inventory has good reason to be held, we can look at the cost structure in order to understand the cost key triggers: • Inventory carrying costs• Inventory ordering costs•...
View ArticleClik here to view.
How to size a safety stock
A safety stock is used to prevent any stockout due to a variable demand and/or a variable delivery leadtime. Bear in mind that holding a safety stock is not free and should be carefully computed per...
View ArticleClik here to view.
Why holding Inventory
Let’s start with the main concepts around inventory: The wish company without inventory All the well known Japanese principles are: no stock, no default, no failure, no delay, no paper… All these ideas...
View ArticleClik here to view.
Impact of holding inventory
As stated in last article, companies do hold inventory as they need for running their business. But holding inventory is not free and so has many financial drawbacks: • Cash flow negative impact:...
View ArticleClik here to view.
The 4 Inventory replenishment models
Now that you should know about the Economic Order Quantity (EOQ) model, the next step is to answer the following question: When to order? Either at fixed period or according to a minimum stock level...
View ArticleClik here to view.
Economic Order Quantity (EOQ) Model
The economic order quantity – EOQ - is the optimum amount of material to order that has the lowest inventory cost taking into account the carrying costs, ordering costs, and stockout costs. If large...
View Article
