Key Terms
raw materials 452
components 452
work-in-process (WIP) 453
finished goods 453
distribution inventory 453
anticipation inventory 453
fluctuation inventory 453
lot-size inventory 453
transportation inventory 453
speculative inventory 454
maintenance, repair, and operating inventory (MRO) 454
customer service 455
percentage of orders shipped on schedule 455
percentage of line items shipped on schedule 456
percentage of dollar volume shipped on schedule 456
setup cost 457
inventory turnover 457
weeks of supply 457
item cost 459
holding costs 459
capital costs 459
storage costs 460
risk costs 460
ordering costs 461
shortage costs 461
back order 461
lost sale 461
Pareto's law 461
ABC classification 461
continuous review system 463
periodic review system 464
two-bin system 464
lead time 464
periodic counting 465
cycle counting 465
vendor-managed inventory (VMI) 466
stock-keeping unit (SKU) 467
lot-for-lot 468
fixed-order quantity 468
min-max system 468
order n periods 468
economic order quantity (EOQ) 468
economic production quantity (EPQ) 473
perpetual inventory record 477
quantity discount model 477
order-cycle service level 483
target inventory level (TI) 485
single-period model 488
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