Determine when to stock, Cost Accounting

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Determine When to Stock

It will be influence with the inventory system in place as given:

1. Periodic order system.

The firm obtains a new order of the amount specified through the order quantity on equal intervals of time. The firms find out the safety stock' the minimum and maximum inventory, and the reorder level.

2. Continuous Review System

The firm places orders at usual intervals however the order quantity varies according to how much a firm needs to bring the level to several predetermined value or size.

3. Just In Time Inventory System

This is a concept developed through the Japanese and advocates zero inventory and stockless production. During the addition, it calls for hundred percent (100%) quality. Several of the major features of JIT involve as:

a) Reliable and frequent deliveries to ignore inventory buildup. Companies are setting also delivery dates along with penalties for not meeting them.

b) Closer position to customers and suppliers

c) Improved communication among suppliers and companies via the employee of computerized purchasing systems which permits for online ordering.

d) Single sourcing and maintain long-term relations along with little trusted suppliers.

e) Raised supplier involvement in the design aspects of a product to ensure about for they meet the company's quality necessities.

f) Maintenance of strict quality control via all parties.


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