Economic Order Quantity,timing of Orders and Safety Stock Are Three

question 7

Essay

Economic Order Quantity,timing of orders and safety stock are three important considerations in inventory management.
Required:
A.EOQ is a mathematical model that minimizes the costs of ordering and holding inventory.Timing of orders takes into account any lead time necessary between placing and receiving the inventory ordered.Safety stock allows for fluctuations in usage and minimizes losses due to lost production.
A.Explain each of these considerations.
B.How is EOQ affected by the timing of orders and safety stock?
B.The need for a lead time when placing orders and maintenance of a safety stock will alter the selection of the EOQ.Proper weighting of the three will result in cost minimization by the company.

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Definitions:

Pharynx

The muscular tube that connects the mouth and nasal passages to the esophagus and larynx; part of the throat.

Gallbladder

A small organ beneath the liver that stores bile, which is used in the digestion of fats.

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An inflammation or infection of one or more diverticula in the digestive tract.

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Build-up of liquid within the peritoneal space, frequently resulting from liver dysfunction or cardiac failure.