TAILIEUCHUNG - Lecture Cost management: Measuring, monitoring, and motivating performance (3rd edition) – Chapter 16

Chapter 16 - Inventory management. In this chapter students will be able to: Explain and calculate ordering and carrying costs, calculate economic order quantity, calculate the re-order point including safety stock, analyze the impact of quantity discounts. | Chapter 16: Inventory Management LO1 Explain and calculate ordering and carrying costs LO2 Calculate economic order quantity LO3 Calculate the re-order point including safety stock LO4 Analyze the impact of quantity discounts LO1 Explain and calculate ordering and carrying costs Minimizing inventory costs Total inventory cost consists of: Ordering Costs Carrying Costs Ordering costs are those costs associated with placing an order for parts or goods. Carrying costs include costs for warehousing or storage space. The first bullet is automated. The first click brings in the second bullet. The second click brings in the third bullet. Defining inventory costs Total inventory cost = Ordering Costs + Carrying Costs Ordering costs = A/QxK Where: A = the annual demand for parts or products Q = the number of parts/products each time an order is placed K = the cost of placing an order Carrying costs = Q/2xH Where: Q = the number of parts/products each time an order is placed (dividing by 2 provides an average number) H = the cost of carrying (or holding) one unit in inventory The first bullet is automated. The first click brings in the second bullet. The second click brings in the third bullet. Relationship of inventory costs Ordering costs and carrying costs have an inverse relationship. Smaller ordering quantities (Q) result in higher ordering costs. Larger ordering quantities (Q) result in higher carrying (holding) costs. The first bullet is automated. One click is required for each remaining bullet and sub-bullet. Example: TimePiece Ltd. – Manufacturer of Grandfather Clocks Total inventory cost = Ordering Costs + Carrying Costs $7,500 = $1,500 + $6,000 Ordering costs = 20,000/1,000x$75 = $1,500 Where: A = 20,000 gears Q = 1,000 gears K = $75 per order Carrying costs = 1,000/2x$12 = $6,000 Where: Q = 1,000 gears H = $12 per gear The first bullet is automated. One click is required for each remaining bullet and sub-bullet. LO2 Calculate the economic order quantity .

• Quản trị kinh doanh
• Cost management
• Quản lý chi phí
• Lecture Cost management
• Strategic management
• Decision making
• Inventory management
• Management control systems
• Cost accounting
• Fundamentals of cost accounting
• Cost analysis
• Cost management systems
• Cost systems
• Strategic performance measurement
• Cost management information
• Financial reporting
• Operational performance measurement
• Resource capacity management
• Indirect cost variances
• Cost allocation
• Cost allocation bases
• Cost estimation
• Cost estimation methods
• Ebook Management and cost accounting
• Management and cost accounting
• Management accounting
• Cost assignment
• Process costing
• Cost volume profit analysis
• Project management
• Lecture Project management in practice
• Project cost management
• Project perspective
• Cost management plan
• Cost versus expenses
• Cost volume profit
• Short term profit planning
• Cost planning
• Product life cycle
• Direct cost variances
• Nonfinancial performance measures
• Cost centers
• Profit centers