Chapter 8 Questions 11-20
8.11 Discuss what is meant by ABC analysis of inventory. What are several measures that can determine ABC status? Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page 142). Prentice Hall. Kindle Edition.
ABC analysis of inventory: can be applied in several different ways, recognizes that inventories are not equal value to a firm and that, as a result, all inventories should not be managed in the same way. The 80/20 rule: that 80 percent of a company’s sales come from 20 percent of its products(conversely, 20 percent of sales come from 80 percent of products)
Measures that can determine ABC status
Sales volume in dollars, sales volume in units, the fastest-selling items, item profitability, and item importance
8.12 Define what is meant by dead inventory. What are several ways to manage it? Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page 142-143). Prentice Hall. Kindle Edition.
Dead inventory: refers to a product for which there is no sales during a 12 month period
Managing dead inventory
Desperate measures to manager dead inventory
Just throwing the merchandise away
Dead inventory increases carrying costs and takes up space in warehousing facilities, and a structures process should be in place for managing it Make items to order as opposed to make items to stock
Market their dead stock more aggressively, perhaps through a drastic price reduction or bunching it with more attractive merchandise Sell dead inventory to companies that specialize in selling such items, and Internet sites are available that specialize in selling off dead stock Some dead items can be donated to charitable causes
8.13 In what ways can inventory turnover provide important insights about an organization’s competitiveness and efficiency? Murphy,Jr., Paul R.; Wood, Donald Michael (2014-01-14). Contemporary Logistics (11th Edition) (Page...
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