Definition: The Fixed Period Ordering is an inventory control system, wherein the order for the replenishment of inventory items is sent periodically or after a fixed time interval. It is also called as Fixed Period Deficit Ordering system, because every time the order is placed, the order quantity is different. Thus, fixed period ordering is a method wherein the firm places … [Read more...] about Fixed Period Ordering
Fixed Order Quantity
Definition: The Fixed Order Quantity is the inventory control system, wherein the maximum and minimum inventory levels are fixed, and maximum and fixed amount of inventory can be replenished at a time when the inventory level reaches the auto set reorder point or the minimum stock level. In other words, an auto-reorders point is linked with the pre-fixed amount of inventory … [Read more...] about Fixed Order Quantity
Computerized Inventory Control System
Definition: A Computerized Inventory Control System is the integration of sub-functions involved in the management of inventory into a single cohesive system. It is software installed on the computer systems that enables a firm to keep a check on the inventory levels by performing the automatic counting of inventories, recording withdrawals and revising the stock balance. It … [Read more...] about Computerized Inventory Control System
Outsourcing Inventory System
Definition: The Outsourcing Inventory System is adopted by the firms to reduce the burden of manufacturing the components of the finished goods in-house i.e. within the organization. Thus, a system of buying the products or components from outside vendors rather than manufacturing internally is called as Outsourcing Inventory system. Many companies develop a single source of … [Read more...] about Outsourcing Inventory System
Just-in-Time System
Definition: The Just-in-Time or JIT is an inventory management system wherein the material, or the products are produced and acquired just a few hours before they are put to use. The Just-in-time system is adopted by the firms, to reduce the unnecessary burden of inventory management, in case the demand is less than the inventory raised. The objective of Just-in-time is to … [Read more...] about Just-in-Time System
Three-Bin System
Definition: The Three-Bin System is like a two-bin system, wherein the third bin of inventory is reserved with the supplier. In other words, a manufacturing firm keeps a stock of inventory in two bins, and at the same time, the supplier of the inventory will keep one bin reserved at his location. The Three-bin is built on the concept of Kanban system, a system used by the … [Read more...] about Three-Bin System
ABC Inventory Control System
Definition: The ABC Inventory Control System is applied by those firms that have to maintain several types of inventories. Ideally, it is not desirable to keep the same degree of control over all the inventory types, since each vary in terms of its value of annual consumption. Thus, the ABC Inventory Control System is used to determine the importance of each item of the … [Read more...] about ABC Inventory Control System
Inventory Control System
Definition: The Inventory control system is maintained by every firm to manage its inventories efficiently. Inventory is the stock of products that a company manufactures for sale and the components or raw materials that make up the product. Hence, an inventory comprises of the buffer of raw material, work-in-process inventories and finished goods. Following are … [Read more...] about Inventory Control System
Decision Tree Analysis
Definition: The Decision Tree Analysis is a schematic representation of several decisions followed by different chances of the occurrence. Simply, a tree-shaped graphical representation of decisions related to the investments and the chance points that help to investigate the possible outcomes is called as a decision tree analysis. The decision tree shows Decision Points, … [Read more...] about Decision Tree Analysis
Simulation Analysis
Definition: The Simulation Analysis is a method, wherein the infinite calculations are made to obtain the possible outcomes and probabilities for any choice of action. The concept of simulation analysis can be further comprehended through the following steps: The first step is to model the project. A model shows how the net present value is related to the parameters and … [Read more...] about Simulation Analysis