Inventory Management and Procurement

ECONOMIES OF SCALE

• Reducing costs per unit by increasing production
• Cutting costs by reducing output

BUFFER STOCK

• Goods kept in store to cover seasonal demand, e.g. Christmas sale
• Goods kept in store to cover unforeseen shortages or fluctuations in demand

FACTORY GATE PRICING

• Transport costs are not included in the purchase price of the product
• The price is lower because you buy directly from the manufacturer

SUPPLY CHAIN

• The close co-operation of all parties involved in the making, selling and delivering of a product
• Network of stores that supply customers with a wide variety of products

TENDER

• An assessment or calculation of the approximate cost or value of a product or service
• An offer for goods or services that follows a request for a quotation made by an official body, e.g. local government

The time it takes to produce and supply a product

• Customer order cycle time

• Lead time

The purchasing of goods (materials, parts, supplies, equipment) required to run an enterprise

• Procurement

• Inventory

JUST IN TIME

• The time customers are prepared to wait for the delivery of their order

• A concept of reducing inventories by coordinating the delivery of materials just before they are needed.

• The time it takes to produce and supply a product

An intermediary between manufacturers and retailers which buys in large quantities and resells in smaller quantities

• Wholesaler

• Retailer

• Distributor

Customer Order Cycle Time

• The time it takes to produce and supply a product

• The time customers are prepared to wait for the delivery of their order