INVENTORY MANAGEMENT

Questions & Answers

Group 1
Calisen, Mark Vincent
Rivera, Mailyn
1. What ABC item means.
ABC means ALWAYS BETTER CONTROL.
A item - which is the high value items requiring highest possible
control.
B item - is the medium cost items requiring normal control.
C item - it is the low cost items requiring the simplest possible control.
2. How to compute the Economic Order Quantity (EOQ) in Manufacturing
Operations?
When applied to manufacturing operations, the EOQ formula may be used to
compute the Economic Lot Size ( ELS).
ELS is equal to the quantity of 2 mulitplied by the annual usage (units)
multiplied by the set-up costs over the carrying cost per unit.

Group 2
Rocapor, Joana
Ulalan, Alvin
1. Explain the Material Flow Cycle.
Supply chains are part of a complex material flows cycle that starts with the
extractions of renewable and non-renewable resources which then become
part of the resource supply system. Through a forward logistics process,
these resources are transformed by the manufacturing sector to become final
consumption goods.
2. What are the Inventory Management Techniques.
Inventory Planning
Inventory Control
Modern Inventory Management
Group 3
Lanuza, Mark James

Vega, Jhoven
1. Explain the two cost that must be considered in establishing an optimal safety
stock policy.
The cost of carrying safety stock is the same as the cost of carrying working
inventory while the stockout costs are costs usually expressed in terms of the
costs of alternative sources of supply, loss of customers or goodwill and
shutting down of operations over the stockout period.
2. What are the elements that must be available to meet business requirements?
Inventory Management
Inventory Control
Modern Inventory Management
Group 4
Palecpec, Mary Ann
Valmoria, Jennilyn
1. How do the Economic Order Quantity do to make the Inventory Management
attainable in their goals.
The goal of inventory management is essential for a business to succeed. In
order to attain the goals of the inventory management, EOQ has the
important rule in inventory management to ensure that the company would
minimize its relevant cost.
2. Disadvantages of Inventory Management. Give atleast 2.
1. It does not stop staff stealing stock.
2. Waste a lot of effort if not implemented and maintain correctly.
3. Does not replace incompetent management.

Group 5
Caldeo, Leizel Jane
De guzman, Christiana Jade
1. Why is it important to ask the question "how much to order" and "when to order"
regarding Inventory Management.

 It is important to ask the question "how much to order" and "when to order"
because thats the purpose of inventory management in order to conduct
operations smoothly arising from stockouts. And for them to minimize the
ordering and carrying cost because if they carry less inventory, they may not
meet the demand of their customer and they will run out of stock and
carrying too much inventory will increase the carrying cost.
2. Example of Inventory.
Raw Materials
Work in Process
Finished Goods

Group 6
Abacco, Marimar
Doctolero, Rodolfo
1. Briefly explain the Economic Order Quantity (EOQ)
With the trade off between ordering costs amd carrying costs, an organization
must make its purchase orders based on the point at which these two kinds
of cost can be minimized. Economic Order Quantity, therefore, refers to the
order size that will minimize the total of relevant costs, namely, ordering cost
and carrying cost.
2. Advantages of EOQ Model.

Constant or uniform demand.

Known demand or usage.
Constant unit price.
Constant carrying cost.
Constant ordering cost

Group 7
Callao, Vanessa
Emperador, Lee
1. What are the two cost that must be considered in establishing an optimal safety
stock policy?
The cost to carry safety stock.
The cost of a stock out.
2. Advantages of EOQ Model.

Constant or uniform demand.

Known demand or usage.
Constant unit price.
Constant carrying cost.
Constant ordering cost

Group 8
Basbas, Irene
Domondon, Leizel
1. Briefly explain the subtypes of Inventory Planning.
EOQ Model - it is the quantity to be ordered, which minimize the sum of the ordering
and carryng cost.
Reorder Point - it is the inventory level at the time an order is placed. It is equal to
lead time usage plus safety stock.
Just-in-Time - this is a plan to receive stock as it is needed instead of maintaining a
high inventory.
2. What are the advantages of Inventory Management. Give at least 4.

Know your stock levels.

Conduct stock rotation
Optimise and reduce stock of items that don't move that quickly.
Move quick items to the front thereby speeding up picking.

Group 9
Faustino, Ma. Fatima
Sta. Cruz, Christy
1. What are the goals of inventory management? Explain.
Inventory management is essential for a bussiness to succeed. Good
management of your company's stock decrease excess inventory and ensure
that you have enough product on hand to meet customer product.
2. How to develop inventory plan?
To streamline ordering and reduce wasted time on inventory control.

Group 10
Cacayuran, Rodalyn
Collado, Lovely Joy
1. Determine the optimal safety stock level.
The optimal level of safety stock may be computed based on maximum
usage and on frequency distribution for usages. The relevant costs are
stockout cost and safety stock carrying cost.
2. Determine the costs of stockouts in relation with safety stock.
It is the total effect of a company's failure to service customers or fill their
orders or conduct operations smoothly arising from stockouts or the
nonavailability of raw materials, supplies and merchandise.

Group 11
Estoque, Jhoanne
Pecatoste, Annabelle
1. Enumerate the Success Mantra.
Ensure a continuous supply of raw materials to facilitate uninterrupted
production.
Maintain sufficient stocks of raw materials in periods of short supply and
anticipate price changes.
Maintain sufficient finished goods inventory for smooth sales operation, and
efficient customer service.
Minimize the carrying cost and time.
Control investment in inventories and keep it at an optimum level.
2. Discuss and elaborate the Inventory Costs Behavior Diagram.

 The diagram shows that the bigger is the order size, the bigger is the average
inventory and also the total inventory carrying costs. Total ordering cost
varies inversely with the order size because the bigger os the order size the
less often are orders made. The total of these two relevant costs reach the
minimum level when the order size is equal to EOQ or at the optimum
number of orders. The minimum total cost occur's at the point where the two
cost functions are equal. The coincidence occurs in the most basic EOQ
problem but may not be generalized to more complex problems. The EOQ or
optimal Q answers the question how much to order.

Group 13
Orencia, Mark John
Villanueva, May Ann Joy
1. What are the Assumptions of the EOQ Model. Give atleast 2.
1. Demand occurs at a constant rate throughout the year.
2. Lead time of the receipt of the orders is constant.
3. The entire quantity ordered is received at one time.
2. What is a Safety Stock?
It is the additional quantity of goods in stock at the time an order is placed to
minimze the probability of stocks out.

INVENTORY MANAGEMENT
(Question and Answer)
Presented to:
Edmun Addun, CPA, MBA
In Partial Fulfillment of the
Requirements for Financial Management 2

by:
Panelo, Diana Rose M.
Dacanay, Carolina F.
March 15, 2016