The Economic order quantity or EOQ is the ideal, or most “economic” quantity of units that should be purchased or ordered, to meet demand while simultaneously attempting to minimize the costs of carrying inventory, ordering inventory and stocking out of inventory.
A baseline refers to a measurement that establishes a basis for other future state measures. The baseline is usually the initial set of measurements, observations or data collected which is used for a comparison or a benchmark for improvements. It is sometimes referred to as as a current state.
The future state is a reference to the aim of an individual, team or organization. It can be seen as technical, organizational or philosophical.
Job rotations allow employees to experience different jobs and their responsibilities. They are oftentimes used to help people develop their skill set and advance. Rotations can be temporary assignments or an employee may rotate for longer periods of times as their skills develop.
Order Cost is defined as; a direct labor cost that is incurred when an order is placed. Ordering costs are different from the “Order Costs”.
Inventory shrinkage occurs when actual inventory levels are less than what is recorded. In general, this means something has gone wrong. Formally defined, inventory shrinkage is the depletion of the actual quantities of inventory that is on hand, in process or in transit. This may be caused by regular reductions, scrap, deterioration or even theft.
Ordering costs can skyrocket when managing inventory. On one hand you want to keep your inventory levels low so that you don’t tie up cash and on the other hand you want to have inventory on hand so that you are placing a high volume of orders. Both have their positives and negatives. One of the more common ways to go about lowering ordering costs is to use an approach known as joint replenishment.
A gemba walk is the term used to describe a walk where employees go to observe work at the gemba, which is where the work is done.
Material Requirements Planning is best defined by The Apics Dictionary which is noted below. A set of techniques that uses the bill of material data, inventory data and the master production schedule to calculate requirements for materials.
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