Materials, Labor and Inventory Management

A. Definisi di dalam Inventory Management

1. Purchasing costs are the cost of goods acquired from suppliers, including incoming freight costs. These costs usually make up the largest cost category of goods in inventory. Discounts for various purchase-order sizes and supplier payment terms affect purchasing costs.

2. Ordering costs are the costs of preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments. Ordering costs include the cost of obtaining purchase approvals, as well as other special processing costs.

3. Carrying costs are costs that arise while goods are being held in inventory. Carrying costs include the opportunity cost of the investment tied up in inventory  and the costs associated with storage, such as space rental, insurance, and obsolescence.

4. Stockout costs are costs that arise when a company runs out of a particular item for which there is customer demand, a stockout. The company must act quickly to replenish inventory to meet that demand or suffer the costs of not meeting it. A company may respond to a stockout by expediting an order from a supplier, which can be expensive because of additional ordering and manufacturing costs plus any associated transportation costs. Or the company may lose sales due to the stockout. In this case, the opportunity cost of the stockout includes the lost contribution margin on the sale not made plus any contribution margin lost on future sales due to customer ill will.

5. Costs of quality are the costs incurred to prevent and appraise, or the costs arising as a result of, quality issues. Quality problems arise, for example, because products get spoiled or broken or are mishandled while products are moved in and out of the warehouse. As discussed earlier in Chapter 19, there are four categories of quality costs: prevention costs, appraisal costs, internal failure costs, and external failure costs.

6. Shrinkage costs result from theft by outsiders, embezzlement by employees, misclassifications, and clerical errors. Shrinkage is measured by the difference between (a) the cost of inventory recorded on the books (after correcting errors) and (b) the cost of inventory when physically counted. Shrinkage can often be an important measure of management performance. Consider, for example, the grocery business, where operating income percentages hover around 2%. With such small margins, it is easy to see why one of a store manager’s prime responsibilities is controlling inventory shrinkage. A $1,000 increase in shrinkage will erase the operating income from sales of $50,000 (2% * $50,000 = $1,000). Because shrinkage costs generally increase when a firm’s inventory increases, most firms try not to hold more inventory than necessary.

B. Definisi Safety Stock

Safety stock is inventory held at all times regardless of the quantity of inventory ordered using the EOQ model. Companies use safety stock as a buffer against unexpected increases in demand, uncertainty about lead time, and unavailability of stock from suppliers. Suppose Glare Shade’s managers are uncertain about demand. They expect the demand for UX1s to be 250 units per week, but it could be as high as 400 units per week or as low as 100 units per week. If stockout costs are very high, the managers will want to hold a safety stock of 300 units and incur higher carrying costs. The 300 units equal the maximum excess demand of 1501400 - 2502 units per week times the 2 weeks of purchase-order lead time. If stockout costs are minimal, no safety stock will be held to avoid incurring the additional carrying costs.
C. Pembelian dan Penggunaan Material

D. EOQ dan Time to Order