CHAPTER 11 KEY TERMS
Inventory (483): A stock or store of goods.
Inventory turnover (486): Ratio of average cost of goods sold to average inventory investment.
Periodic system (486): Physical count of items in inventory made at periodic intervals.
Perpetual inventory system (486): System that keeps track of removals from inventory continuously, thus monitoring current levels of each item.
Two-bin system (487): Two containers of inventory; reorder when the first is empty.
Universal Product Code (487): Bar code printed on a label that has information about the item to which it is attached.
Lead Time (489): Time interval between ordering and receiving the order.
Point-of-sale (POS) systems (489): Record items at time of sale.
Holding (carrying) cost (489): Cost to carry an item in inventory for a length of time, usually a year.
Ordering costs (489): Costs of ordering and receiving inventory.
Shortage costs (489): Costs resulting when demand exceeds the supply of inventory; often unrealized profit per unit.
A-B-C approach (490): Classifying inventory according to some measure of importance, and allocating control efforts accordingly.
Cycle accounting (491): A physical count of items in inventory.
Economic order quantity (EOQ) (492): The order size that minimizes total annual cost.
Quantity discounts (499): Price reductions for large orders.
Reorder point (ROP) (504): When the quantity on hand of an item drops to this amount, the item is reordered.
Safety stock (505): Stock that is held in excess of expected demand due to variable demand and/or lead time.
Service level (505): Probability that demand will not exceed supply during lead time.
Fixed-order-interval (FOI) model (511): Orders are placed at fixed time intervals.
Single-period model (514): Model for ordering of perishables and other items with limited useful lives.
Shortage costs (514): Generally, the unrealized profit per unit.
Excess cost (514): Difference between purchase cost and salvage value of items left over at the end of a period.