Inventory

Mirror image, revenue cycle we get an order, expenditure cycle we place an order, revenue we ship, expenditure we receive, revenue we bill, expenditure we pay

Get stuff, minimize the cost of acquiring, carrying, storing, product supply, inventory, services

Inventory are things you sell, supplies are used to run the business. In terms of efficiency there are more improvements to be made in the process of ordering supplies than there are in ordering inventory due to the frequency of supply orders

The number of purchase orders (the activity)

Purchase requisition is a request, an internal doc only and becomes the supporting documentation to generate a purchase order

Contract,once accepted by the company its a contract, provided the supplier can do their part and fill the order, you are obligated to pay

Order itReceive itApprove itPay it

Keeping your approved vendor list (doing data analytics on history)Stockouts

EOQ-economic order quantitiy, old school inventory,goal is to:(1)Minimize ordering costs(2)Minimize carrying costs(3)Minimize out of stock costs (what will it cost if you run out) EOQ results in high amounts of inventory

Minimize inventory, perhaps even eliminate inventory. There are multiple areas to receive at the purchasers facilitites, time in motion studies have been done, all resulting in efficiency and little inventory if any.

Suppliers are given access to inventory system so they can handle all the reorderingAdvantages- Weakness-They have access to your systemThey may saddle you with more product than you really need to make sales numbers MRP-You should use MRP whe demand is easily, accurately forcastable

True

Purchase requistion is internal only, eventually it turns into a PO, a manager signed off on the requistion and a purchaser turns the requistion into a PO (a contract, an actionable item, legal recourse for both parties)

The number of PO's, the activity involved

Reverse auctions- Tru value goes to auction site and asks "how much will you charge me for 500 rakes?" Reverse acutions big on commondity scales, example someone has too much lumber,too much ground beef wants to get rid of some reverse auction is avenute to do so