7 Pages Posted: 5 Apr 2010
Inventory replenishment concepts and tools are described.
Rev. Dec 1, 2010
MANAGING INVENTORIES: THE REORDER POINT SYSTEM
Inventories account for a significant percentage of the current assets of companies in industries ranging from hospitals and restaurants to manufacturing, wholesaling, and retailing firms. So, managing inventories is often the key aspect of improving a firm's working capital position and its return on assets. An inventory-management system is a set of procedures for managing the items in inventory. The focus in this note is on one such system—the reorder point system. Other inventory management systems and concepts have been addressed in separate technical notes.
The selection of a system for an item or group of items depends, in part, on the type of demand experienced by the item. There are two basic types of demand: forecast demand and scheduled requirements demand.
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Keywords: control systems, inventory management, operations management, reorder point system
Suggested Citation: Suggested Citation
Freeland, James R. and Weiss, Elliott N. and Landel, Robert, Managing Inventories: The Reorder Point System. Darden Case No. UVA-OM-1394. Available at SSRN: https://ssrn.com/abstract=1584179
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