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Which is the best definition of reorder point?
Reorder point is the point either in time or in a process when the next order should be placed.
LO 2, AC 2.3
Your employers have expanded rapidly over the past five years and have acquired a number of smaller companies in the same industry. Unfortunately, all of the companies purchased have manual inventory systems. Your employer is setting up a computerised inventory control system and wishes to ensure that all stock is classified under the appropriate headings. Under what classification would semi-finished goods be classified?
The managing director requires action to be taken to improve the organization's profitability and has asked for suggestions to enable this to be achieved. The procurement manager has said that a just-in-time (JIT) system should be introduced. Would such a system improve profitability?
Just-in-Time (JIT) inventory management minimizes stock levels by synchronizing orders with production schedules, which:
Reduces holding costs: Less inventory means lower costs for storage and management.
Increases cash flow: Reduced stock levels free up working capital.
Whole-life asset management supports JIT as a cost-saving measure, focusing on maintaining lean inventories while meeting production needs.
XYZ Ltd is a major distributor of electrical equipment protection products in the United States. XYZ found that there was a lack of communication between the company and its key supplier, leading to the supplier trying to predict distributor needs and distributor attempting to estimate lead times. Essentially, both the supplier and the distributor have different sets of information, spending time and money trying to predict what the other will do. To deal with this problem, XYZ Ltd decides to implement new inventory management method in which the supplier manage the replenishment of items for sale. Both parties are obliged to share information on variations in demand and stock levels for goods used for or sale. Which inventory management method is XYZ Ltd implementing?
Floor-Ready Merchandise can be defined as the merchandise that is pre-tagged, pre ticketed and pre-occupied with all the necessary details and information such as marked to their specifications for style, size, type, color and price, this information is required in the retail store and is done before it reaches the retail store.
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has been refined over time. The formula assumes that demand, ordering, and holding costs all remain constant.
The full definition of reverse logistics, as according to The Council of Logistics Management, is the process of implementing, controlling, and planning the cost-effective flow of finished goods, raw materials, and in-process inventory. The flow is from the point of consumption (i.e. the customer) to the point of origin (i.e. the manufacturer), to properly dispose of these or to recapture value.
In the scenario, XYZ solves the current situation by letting the supplier to management the inventory and sharing stock level information with the supplier. Vendor managed inventory is the most suitable answer.
LO 3, AC 3.1
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