Inventory Carrying Cost -  Materials Management Vocabulary

 

 

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Implied Warranty
A specific assurance made by the seller concerning the performance , quality or character of the goods or services sold. An express warranty delineates the rights and obligations of the parties if the item / service is defective. The term is also known as Guarantee
Import Declaration
Documents used to inform the government of an importing country about the nature, value and origin of goods being imported
Import License
It's a permit from a national government to bring goods into the country. A license authorises anybody to import specified goods
Incidental damages
Expenses reasonably incurred in the inspection, receipt, transportation, and care of goods rightfully rejected by a purchaser.
INCOTERMS
INCOTERMS are international rules for the interpretation of terms used in foreign trade contracts, recognised worldwide, developed by the International Chamber of Commerce to define sellers' and buyers' responsibilities.
Indefinite Delivery Contracts
Broadly ,there are three types of indefinite delivery or term type contracts viz. Indefinite quantity indefinite delivery contracts, indefinite quantity definite delivery contracts and requirements contracts
Indemnification
This clause , also known as "hold harmless", "defend" or "indemnify" is used to protect a purchaser or supplier from loss or damage. The words "hold harmless" and "indemnify" refer to getting reimbursed for penalties or liabilities incurred by one party because of another's action and pertain to monetary or financial loss.
The word "defend" imposes an obligation on one contracting party to defend the other in a legal action and to incur the cost of such action. These clauses are used in Purchase Orders
Independent Demand
Demand not directly related to the demand for other items or end items produced by the organisation
Inspection
It refers to checking the quality of products and services to determine whether they meet the specifications. Usually, purchaser has the right to do inspection before accepting the materials
Igloos
Pallets and containers used in air transportation; the igloo shape is designed to fit the internal wall contours of a narrow body airplane.
Import
Movement of products from one country into another. The import of automobiles from Germany to the U.S. is an example.
Import/Export License
Official authorization issued by a government allowing the shipping or delivery of a product across national boundaries.
Inbound Logistics
The movement of materials from suppliers and vendors into production processes or storage facilities.
Incentive rate
A rate designed to induce the shipper to ship heavier volumes per shipment.
Independent action
A carrier that is a member of a rate bureau has the right to publish a rate that differs from the rate published by the rate bureau.
Independent Demand Item Management Models
Models for the management of items whose demand is not strongly influenced by other items managed by the same company. These models can be characterized as follows:
(1) stochastic or deterministic, depending on the variability of demand and other factors;
(2) fixed quantity, fixed cycle, or hybrid - (optional replenishment).
Indirect Retail Locations
A retail location that ultimately sells your product to consumers, but who purchases your products from an intermediary, like a distributor or wholesaler.
Infinite Loading
Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.
Insourcing
The opposite of outsourcing, that is, a serve performed in-house.
Integrated Logistics
A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity, rather than managing individual functions separately.
Inter-coastal carriers
Water carriers that transport freight between East and West Coast ports, usually by way of the Panama Canal.
Inter-corporate hauling
A private carrier hauling the goods of a subsidiary and charging the subsidiary a fee: this is legal if the subsidiary is wholly owned (100%) or if the private carrier has common carrier authority.
Interline
Two or more motor carriers working together to haul the shipment to a destination. Carrier equipment may be interchanged from one carrier to the next, but usually the shipment is re-handled without the equipment.
Intermediately Positioned Warehouse
A warehouse located between customers and manufacturing plants to provide increased customer service and reduced distribution cost.
Intermittent-flow, fixed-path equipment
Materials handling devices that include cranes, monorails, and stacker cranes.
Intermodal Transportation
Transporting freight by using two or more transportation modes such as by truck and rail or truck and oceangoing vessel.
In-transit Inventory
Material moving between two or more locations, usually separated geographically; for example, finished goods being shipped from a plant to a distribution center. In-transit inventory is an easily overlooked component of total supply chain availability.
Intrinsic Forecast Method
In forecasting, a forecast based on internal factors, such as an average of past sales.
Inventory Carrying Cost
One of the elements comprising a company's total supply-chain management costs. These costs consist of the following:
1.
Opportunity Cost: The opportunity cost of holding inventory. This should be based on your company's own cost of capital standards using the following formula. Calculation: Cost of Capital x Average Net Value of Inventory
2.
Shrinkage: The costs associated with breakage, pilferage, and deterioration of inventories. Usually pertains to the loss of material through handling damage, theft, or neglect.
3.
Insurance and Taxes: The cost of insuring inventories and taxes associated with the holding of inventory.
4.
Total Obsolescence for Raw Material, WIP, and Finished Goods Inventory: Inventory reserves taken due to obsolescence and scrap and includes products exceeding the shelf life, i.e. spoils and is no good for use in its original purpose (do not include reserves taken for Field Service Parts).
5.
Channel Obsolescence: Aging allowances paid to channel partners, provisions for buy-back agreements, etc. Includes all material that goes obsolete while in a distribution channel. Usually, a distributor will demand a refund on material that goes bad (shelf life) or is no longer needed because of changing needs.
6.
Field Service Parts Obsolescence: Reserves taken due to obsolescence and scrap. Field Service Parts are those inventory kept at locations outside the four walls of the manufacturing plant i.e., distribution center or warehouse.
Inventory Deployment
A technique for strategically positioning inventory to meet customer service levels while minimizing inventory and storage levels. Excess inventory is replaced with information derived through monitoring supply, demand and inventory at rest as well as in motion.
Inventory Management
The process of ensuring the availability of products through inventory administration.
Inventory Planning Systems
The systems that help in strategically balancing the inventory policy and customer service levels throughout the supply chain. These systems calculate time-phased order quantities and safety stock, using selected inventory strategies.

 

 

 

 

 

 

Some inventory planning systems conduct what-if analysis and that compares the current inventory policy with simulated inventory scenarios and improves the inventory ROI.
Inventory Turns
The cost of goods sold divided by the average level of inventory on hand. This ratio measures how many times a company's inventory has been sold during a period of time. Operationally, inventory turns are measured as total throughput divided by average level of inventory for a given period; How many times a year the average inventory for a firm changes over, or is sold.
Inventory Velocity
The speed with which inventory moves through a defined cycle (i.e., from receiving to shipping)

 

 

 Get terms alphabeticallyA B C D E F G H I J K L M N O P Q R S T U V W X Y Z

 

 

 

 

 

 

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