Flashcards
cost of raw material & inventory management
Flashcards do conjunto (10)
- 1what is EOQIt is the economic order quantity,where holding costs and odering costs are their minimum. on a graph it is the point where HC and OC intercest. This point is an optimum point
- 2Formula for EOQcarrying cost AKA holding cost
order cost is the cost per order - 3What are the ASSUMPTIONS for the EOQ formula?*Holding cost per unit remain constant
Average inventory = 1/2 order quantity;
▫ Sales can be forecasted and are evenly over the year
▫ Waiting time for orders is determined beforehand and orders
are received without delays.
=There is no safety stock - 4What is the production run formula? How do you determine the no. of runs?same as EOQ just remove cost per order and put setup cost.
-this detemines the size(no. of units) of each run
-no. of runs = annual demand/size of each run - 5Re-order point formula?Re-order point = average lead time x average usage per
period + safety stock minus outstanding orders* - 6optimum safety inventory level ?where the total cost of holding the
inventory and the out-of-stock costs are minimised. - 7Out of stock costWhen stockout occurs for raw material and WIP the cost of being out of stock = cost of stoppage in production and the resulting inefficiencies that occur
In the case of finished goods, the opp cost will consist of lost contribution - 8Discuss MRPMRP=Material requirements planning
With MRP orders are only placed when components and raw materials
are required to maintain the production flow.
MRP can be defined as a computerised planning system which
determines the timing and quantity of finished products required, from
this the required raw material components and sub-components of
each production phase are determined.
This planning system is based on a master production schedule.
For the purpose of planning the required components it is necessary to
determine a "bill-of-materials" for each finished product.
It is also necessary to have detailed inventory lists for each component
and sub-component so that the required raw materials can be
determined. - 9Discuss JITJIT=Just in time
The objective of JIT is to manufacture the required items of the required
quality and in the required quantities at the exact time they are required.
More specific objectives include:
eliminating activities that do not add value to the goods and services
that are being supplied;
reducing the inventory levels to a minimum or to zero;
zero-defect production;
optimal flexibility of the plant so that it is economically justifiable to
manufacture only one unit per production run;
to have no delays in the manufacturing, management or packaging
process as a result of equipment failure;
on time delivery of goods and services by suppliers and to clients. - 10optimized production technologyOptimized production technology
The OPT approach determines what is limiting increased output by
identifying bottle-necks (limiting factors).
The objective is to remove bottle-necks or, if this is not possible, to
ensure the optimal application of the limiting factors/resources.
The factors that are not limited must be scheduled in such a way to
ensure that not more products are manufactured that can be absorbed
by the most limiting factors (bottle-necks).
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- theory and formulas on cost of raw material & inventory management
- Criado por
- Tshilidzi Thathaisa
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