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Supply Chain
Definitions
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Inventory Definitions: (coming soon) ABC Classification - a method of classifying inventory into groups. A typical method is to multiply the Unit Price by the annual Expected Volume. This will give you the expected annual dollar volume. The next step is to rank the products in descending order. The first group "A" should represent approximately 50% to 70% of the projected dollar volume. This is usually 10% -20% of the of the number of items. The second group "B" should represent about 20% of the next dollar volume, which should be about 20% of the items. The remaining group "C" should be the remaining 10% to 30% of the expected total volume (or 60% to 70% of the products). Pull System - a system for replenishing distribution center inventories where the inventory decisions are made at the distribution center and "pulled" from the manufacturing plant. (decentralized decision making) Push System - a system for replenishing distribution center inventories where the inventory decisions are made at the manufacturing location. The stock is then "pushed" out to the distribution centers. (centralized decision making) |
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The definitions contained on this website are the opinions
of the webmaster. Different businesses may have different definitions. Please
check numerous sources to ensure that you have the correct definitions.
SupplyChainMetric.com - an overview of various measurements used in a supply
chain.
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