SlideShare a Scribd company logo
1 of 30
PRODUCTION MANAGEMENT MANAGING INVENTORY farrah detuya
INVENTORY MANAGEMENT’S OBJECTIVE TO STRIKE A BALANCE BETWEEN INVENTORY INVESTMENT   AND  CUSTOMER SERVICE
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],REASONS FOR INVENTORIES
TYPES OF INVENTORIES ,[object Object],[object Object],[object Object],[object Object]
INVENTORY CLASSIFICATION ,[object Object],[object Object]
ABC analysis (con’t)… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ABC analysis example 1 $ 60 90 2 350 40 3 30 130 4 80 60 5 30 100 6 20 180 7 10 170 8 320 50 9 510 60 10 20 120 PART UNIT COST ANNUAL USAGE 1 $ 60 90 2 350 40 3 30 130 4 80 60 5 30 100 6 20 180 7 10 170 8 320 50 9 510 60 10 20 120 PART UNIT COST ANNUAL USAGE TOTAL % OF TOTAL % OF TOTAL PART VALUE VALUE QUANTITY % CUMMULATIVE 9 $30,600 35.9 6.0 6.0 8 16,000 18.7 5.0 11.0 2 14,000 16.4 4.0 15.0 1 5,400 6.3 9.0 24.0 4 4,800 5.6 6.0 30.0 3 3,900 4.6 10.0 40.0 6 3,600 4.2 18.0 58.0 5 3,000 3.5 13.0 71.0 10 2,400 2.8 12.0 83.0 7 1,700 2.0 17.0 100.0 $85,400 A B C % OF TOTAL % OF TOTAL CLASS ITEMS VALUE QUANTITY A 9, 8, 2 71.0 15.0 B 1, 4, 3 16.5 25.0 C 6, 5, 10, 7 12.5 60.0
MAINTAINING ACCURATE RECORDS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
CONTROL OF SERVICE INVENTORIES ,[object Object],[object Object],[object Object],[object Object],[object Object],Items unaccounted between receipt and time of sale Inventory theft
INVENTORY MODELS ,[object Object],[object Object],[object Object],[object Object],Assume that demand for an item is either Independent of or Dependent on the demand for the other item.
ECONOMIC ORDER QUANTITY (EOQ) ,[object Object],[object Object],[object Object],[object Object],Optimal order quantity that will minimize total inventory costs Assumptions of EOQ:
INVENTORY ORDER CYCLE Demand rate Time Lead time Lead time Order placed Order placed Order receipt Order receipt Inventory Level Reorder point,  R Order quantity,  Q 0
EOQ COST MODEL C o  - cost of placing order D  - annual demand C c  - annual per-unit carrying cost Q  - order quantity Annual ordering cost = C o D Q Annual carrying cost = C c Q 2 Total cost =  + C o D Q C c Q 2
EOQ (con’t)… Order Quantity,  Q Annual cost ($) Total Cost Carrying Cost = C c Q 2 Slope = 0 Minimum total cost Optimal order Q opt Ordering Cost = C o D Q
EOQ example C c  = $0.75 per yard C o  = $150 D  = 10,000 yards Orders per year = D / Q opt = 10,000/2,000 = 5 orders/year Order cycle time = 311 days/( D / Q opt ) = 311/5 = 62.2 store days Q opt  = 2 C o D C c Q opt  = 2(150)(10,000) (0.75) Q opt  = 2,000 yards TC min  =  + C o D Q C c Q 2 TC min  =  + (150)(10,000) 2,000 (0.75)(2,000) 2 TC min  = $750 + $750 = $1,500
PRODUCTION QTY MODEL ,[object Object],[object Object],[object Object],[object Object]
PRODUCTION QTY MODEL ( con’t)… Q (1- d/p ) Inventory level (1- d/p ) Q 2 Time 0 Order receipt period Begin order receipt End order receipt Maximum inventory level Average inventory level
PRODUCTION QTY MODEL (con’t)… p  = production rate d  = demand rate Maximum inventory level = Q  -  d = Q  1 - Q p d p Average inventory level =  1 - Q 2 d p TC  =  +  1 - d p C o D Q C c Q 2 Q opt  = 2 C o D C c   1 -  d p
PRODUCTION QTY MODEL (con’t)… C c  = $0.75 per yard C o  = $150 D  = 10,000 yards d  = 10,000/311 = 32.2 yards per day p  = 150 yards per day Q opt  =  =  = 2,256.8 yards 2 C o D C c   1 -  d p 2(150)(10,000) 0.75  1 -  32.2 150 TC  =  +  1 -  = $1,329 d p C o D Q C c Q 2 Production run =  =  = 15.05 days per order Q p 2,256.8 150
PRODUCTION QTY MODEL (con’t)… Number of production runs =  =  = 4.43 runs/year D Q 10,000 2,256.8 Maximum inventory level = Q  1 -  = 2,256.8  1 - = 1,772 yards d p 32.2 150
QUANTITY DISCOUNTS Price per unit decreases as order quantity increases TC  =  +  +  PD C o D Q C c Q 2 where P  = per unit price of the item D  = annual demand
QUANTITY DISCOUNTS (con’t)… ORDER SIZE  PRICE 0 - 99   $10 100 – 199  8 ( d 1 ) 200+  6 ( d 2 ) Q opt Carrying cost  Ordering cost  Inventory cost ($) Q ( d 1  ) = 100 Q ( d 2  ) = 200 TC  ( d 2  = $6 )  TC  ( d 1  = $8 )   TC  = ($10 )
QUANTITY DISCOUNTS (con’t)… C o  = $2,500  C c  = $190 per computer  D  = 200 QUANTITY PRICE 1 - 49 $1,400 50 - 89 1,100 90+ 900 Q opt  =  =  = 72.5 PCs 2 C o D C c 2(2500)(200) 190 TC  =  +  +  PD  = $233,784  C o D Q opt C c Q opt 2 For  Q  = 72.5 TC  =  +  +  PD  = $194,105 C o D Q C c Q 2 For  Q  = 90
PROBABILISTIC MODELS Reorder Point  = Level of inventory at which a new order is placed  R = dL where d  = demand rate per period L  = lead time Demand = 10,000 yards/year Store open 311 days/year Daily demand = 10,000 / 311 = 32.154 yards/day Lead time = L = 10 days R = dL = (32.154)(10) = 321.54 yards Applicable when product demand or any other variable is not known but can be specified by means of a probability distribution
Safety Stock ,[object Object],Reorder Point with  a Safety Stock Reorder point,  R Q LT Time LT Inventory level 0 Safety Stock
Reorder point with variable demand R  =  dL  +  z  d   L where d = average daily demand L = lead time  d = the standard deviation of daily demand  z = number of standard deviations corresponding to the service level probability z  d   L = safety stock
Reorder Point with variable demand (con’t)… Probability of  meeting demand during  lead time = service level Probability of  a stockout R Safety stock d L Demand z  d   L
Reorder Point with variable demand example The carpet store wants a reorder point with a 95% service level and a 5% stockout probability For a 95% service level,  z  = 1.65 Safety stock =  z    d   L = (1.65)(5)(  10) = 26.1 yards d = 30 yards per day L = 10 days  d = 5 yards per day R =  dL  +  z    d   L = 30(10) + (1.65)(5)(  10) = 326.1 yards
Order Quantity for a Periodic Inventory System Q  =  d ( t b  +  L ) +  z  d   t b  +  L   -  I where d = average demand rate t b = the fixed time between orders L = lead time s d = standard deviation of demand   z  d   t b  +  L = safety stock I = inventory level
Fixed-Period Model with Variable Demand d = 6 bottles per day s d = 1.2 bottles t b = 60 days L = 5 days I = 8 bottles z = 1.65 (no. of sd for a 95% service level) Q =  d ( t b  +  L ) +  z  d   t b  +  L   -  I = (6)(60 + 5) + (1.65)(1.2)  60 +  5 - 8 = 397.96 bottles

More Related Content

Viewers also liked

Optimizing Cash Flow With A Dynamic Inventory Mgmt Model
Optimizing Cash Flow With A Dynamic Inventory Mgmt ModelOptimizing Cash Flow With A Dynamic Inventory Mgmt Model
Optimizing Cash Flow With A Dynamic Inventory Mgmt Modelsyosko
 
Materials and inventory management
Materials and inventory managementMaterials and inventory management
Materials and inventory managementZeynep Çıkın
 
บทที่ 12 การจัดการสินค้าคงคลัง
บทที่ 12 การจัดการสินค้าคงคลังบทที่ 12 การจัดการสินค้าคงคลัง
บทที่ 12 การจัดการสินค้าคงคลังDr.Krisada [Hua] RMUTT
 
บทที่ 11 การจัดการโซ่อุปทาน
บทที่ 11 การจัดการโซ่อุปทานบทที่ 11 การจัดการโซ่อุปทาน
บทที่ 11 การจัดการโซ่อุปทานDr.Krisada [Hua] RMUTT
 

Viewers also liked (6)

Inventory mgmt
Inventory mgmtInventory mgmt
Inventory mgmt
 
Optimizing Cash Flow With A Dynamic Inventory Mgmt Model
Optimizing Cash Flow With A Dynamic Inventory Mgmt ModelOptimizing Cash Flow With A Dynamic Inventory Mgmt Model
Optimizing Cash Flow With A Dynamic Inventory Mgmt Model
 
Materials and inventory management
Materials and inventory managementMaterials and inventory management
Materials and inventory management
 
บทที่ 12 การจัดการสินค้าคงคลัง
บทที่ 12 การจัดการสินค้าคงคลังบทที่ 12 การจัดการสินค้าคงคลัง
บทที่ 12 การจัดการสินค้าคงคลัง
 
บทที่ 11 การจัดการโซ่อุปทาน
บทที่ 11 การจัดการโซ่อุปทานบทที่ 11 การจัดการโซ่อุปทาน
บทที่ 11 การจัดการโซ่อุปทาน
 
Materials management ppt
Materials management pptMaterials management ppt
Materials management ppt
 

Similar to Inventory management

inventory management ppt
inventory management pptinventory management ppt
inventory management pptMayank Baheti
 
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptx
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptxAminullah Assagaf_P10-Ch.13_Inventory Management-32.pptx
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptxAminullah Assagaf
 
24867879 inventory-management-control-lecture-3
24867879 inventory-management-control-lecture-324867879 inventory-management-control-lecture-3
24867879 inventory-management-control-lecture-3Harshawardhan Thakare
 
Inventory management
Inventory managementInventory management
Inventory managementAPOORVNIGAM2
 
Productions & Operations Management Chapter 12
Productions & Operations Management Chapter 12Productions & Operations Management Chapter 12
Productions & Operations Management Chapter 12jncgw5t6xq
 
Inventory management
Inventory managementInventory management
Inventory managementKaizer Dave
 
Inventory management
Inventory managementInventory management
Inventory managementKuldeep Uttam
 
Inventory management
Inventory managementInventory management
Inventory managementHriday Bora
 
Lession - 1(Inventory Management).pptx
Lession - 1(Inventory Management).pptxLession - 1(Inventory Management).pptx
Lession - 1(Inventory Management).pptxRajeevRanjan743854
 
Session 6
Session 6Session 6
Session 6thangv
 
Operations research : Inventory/Production Managemet and Queueing Theory
Operations research : Inventory/Production Managemet and Queueing TheoryOperations research : Inventory/Production Managemet and Queueing Theory
Operations research : Inventory/Production Managemet and Queueing TheoryThasneemRazia
 
Inventory management
Inventory managementInventory management
Inventory managementAngelaMaurya
 
9 Replacement problems.pptx .
9 Replacement problems.pptx                        .9 Replacement problems.pptx                        .
9 Replacement problems.pptx .Athar739197
 
Multiechelon copy
Multiechelon copyMultiechelon copy
Multiechelon copyAnand Ellur
 
Traditional model limitations
Traditional model limitationsTraditional model limitations
Traditional model limitationskhaneducation
 

Similar to Inventory management (20)

Inventry..
Inventry..Inventry..
Inventry..
 
inventory management ppt
inventory management pptinventory management ppt
inventory management ppt
 
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptx
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptxAminullah Assagaf_P10-Ch.13_Inventory Management-32.pptx
Aminullah Assagaf_P10-Ch.13_Inventory Management-32.pptx
 
24867879 inventory-management-control-lecture-3
24867879 inventory-management-control-lecture-324867879 inventory-management-control-lecture-3
24867879 inventory-management-control-lecture-3
 
Inventory management
Inventory managementInventory management
Inventory management
 
Eoq model
Eoq modelEoq model
Eoq model
 
Productions & Operations Management Chapter 12
Productions & Operations Management Chapter 12Productions & Operations Management Chapter 12
Productions & Operations Management Chapter 12
 
Inventory management
Inventory managementInventory management
Inventory management
 
ECONOMIC ORDER QTY
ECONOMIC ORDER QTYECONOMIC ORDER QTY
ECONOMIC ORDER QTY
 
Inventory management
Inventory managementInventory management
Inventory management
 
Inventory management
Inventory managementInventory management
Inventory management
 
Lession - 1(Inventory Management).pptx
Lession - 1(Inventory Management).pptxLession - 1(Inventory Management).pptx
Lession - 1(Inventory Management).pptx
 
Chapter 6_OM
Chapter 6_OMChapter 6_OM
Chapter 6_OM
 
Session 6
Session 6Session 6
Session 6
 
5A-INVENTORY MGT.ppt
5A-INVENTORY MGT.ppt5A-INVENTORY MGT.ppt
5A-INVENTORY MGT.ppt
 
Operations research : Inventory/Production Managemet and Queueing Theory
Operations research : Inventory/Production Managemet and Queueing TheoryOperations research : Inventory/Production Managemet and Queueing Theory
Operations research : Inventory/Production Managemet and Queueing Theory
 
Inventory management
Inventory managementInventory management
Inventory management
 
9 Replacement problems.pptx .
9 Replacement problems.pptx                        .9 Replacement problems.pptx                        .
9 Replacement problems.pptx .
 
Multiechelon copy
Multiechelon copyMultiechelon copy
Multiechelon copy
 
Traditional model limitations
Traditional model limitationsTraditional model limitations
Traditional model limitations
 

More from May Farrah Detuya - Vidal (16)

The way you see others
The way you see othersThe way you see others
The way you see others
 
Life in the holy spirit
Life in the holy spiritLife in the holy spirit
Life in the holy spirit
 
What it means to be a christian
What it means to be a christianWhat it means to be a christian
What it means to be a christian
 
God's Love
God's LoveGod's Love
God's Love
 
LOVING YOUR NEIGHBOR
LOVING YOUR NEIGHBORLOVING YOUR NEIGHBOR
LOVING YOUR NEIGHBOR
 
Talk10 growing in the spirit
Talk10 growing in the spiritTalk10 growing in the spirit
Talk10 growing in the spirit
 
Sales law of bulls eye
Sales   law of bulls eyeSales   law of bulls eye
Sales law of bulls eye
 
7 spiritual perspectives on personal leadership
7 spiritual perspectives on personal leadership7 spiritual perspectives on personal leadership
7 spiritual perspectives on personal leadership
 
The purpose driven life
The purpose driven lifeThe purpose driven life
The purpose driven life
 
Pricing
PricingPricing
Pricing
 
Job analysis, job design, job specification
Job analysis, job design, job specificationJob analysis, job design, job specification
Job analysis, job design, job specification
 
Ethics & corruption in the global marketplace.1
Ethics & corruption in the global marketplace.1Ethics & corruption in the global marketplace.1
Ethics & corruption in the global marketplace.1
 
7 Habits of Highly Effective People
7 Habits of Highly Effective People7 Habits of Highly Effective People
7 Habits of Highly Effective People
 
First things first
First things firstFirst things first
First things first
 
Alternative Decisions in Financial Management
Alternative Decisions in Financial ManagementAlternative Decisions in Financial Management
Alternative Decisions in Financial Management
 
Ideation, Innovation and Creativity
Ideation, Innovation and CreativityIdeation, Innovation and Creativity
Ideation, Innovation and Creativity
 

Inventory management

  • 1. PRODUCTION MANAGEMENT MANAGING INVENTORY farrah detuya
  • 2. INVENTORY MANAGEMENT’S OBJECTIVE TO STRIKE A BALANCE BETWEEN INVENTORY INVESTMENT AND CUSTOMER SERVICE
  • 3.
  • 4.
  • 5.
  • 6.
  • 7. ABC analysis example 1 $ 60 90 2 350 40 3 30 130 4 80 60 5 30 100 6 20 180 7 10 170 8 320 50 9 510 60 10 20 120 PART UNIT COST ANNUAL USAGE 1 $ 60 90 2 350 40 3 30 130 4 80 60 5 30 100 6 20 180 7 10 170 8 320 50 9 510 60 10 20 120 PART UNIT COST ANNUAL USAGE TOTAL % OF TOTAL % OF TOTAL PART VALUE VALUE QUANTITY % CUMMULATIVE 9 $30,600 35.9 6.0 6.0 8 16,000 18.7 5.0 11.0 2 14,000 16.4 4.0 15.0 1 5,400 6.3 9.0 24.0 4 4,800 5.6 6.0 30.0 3 3,900 4.6 10.0 40.0 6 3,600 4.2 18.0 58.0 5 3,000 3.5 13.0 71.0 10 2,400 2.8 12.0 83.0 7 1,700 2.0 17.0 100.0 $85,400 A B C % OF TOTAL % OF TOTAL CLASS ITEMS VALUE QUANTITY A 9, 8, 2 71.0 15.0 B 1, 4, 3 16.5 25.0 C 6, 5, 10, 7 12.5 60.0
  • 8.
  • 9.
  • 10.
  • 11.
  • 12. INVENTORY ORDER CYCLE Demand rate Time Lead time Lead time Order placed Order placed Order receipt Order receipt Inventory Level Reorder point, R Order quantity, Q 0
  • 13. EOQ COST MODEL C o - cost of placing order D - annual demand C c - annual per-unit carrying cost Q - order quantity Annual ordering cost = C o D Q Annual carrying cost = C c Q 2 Total cost = + C o D Q C c Q 2
  • 14. EOQ (con’t)… Order Quantity, Q Annual cost ($) Total Cost Carrying Cost = C c Q 2 Slope = 0 Minimum total cost Optimal order Q opt Ordering Cost = C o D Q
  • 15. EOQ example C c = $0.75 per yard C o = $150 D = 10,000 yards Orders per year = D / Q opt = 10,000/2,000 = 5 orders/year Order cycle time = 311 days/( D / Q opt ) = 311/5 = 62.2 store days Q opt = 2 C o D C c Q opt = 2(150)(10,000) (0.75) Q opt = 2,000 yards TC min = + C o D Q C c Q 2 TC min = + (150)(10,000) 2,000 (0.75)(2,000) 2 TC min = $750 + $750 = $1,500
  • 16.
  • 17. PRODUCTION QTY MODEL ( con’t)… Q (1- d/p ) Inventory level (1- d/p ) Q 2 Time 0 Order receipt period Begin order receipt End order receipt Maximum inventory level Average inventory level
  • 18. PRODUCTION QTY MODEL (con’t)… p = production rate d = demand rate Maximum inventory level = Q - d = Q 1 - Q p d p Average inventory level = 1 - Q 2 d p TC = + 1 - d p C o D Q C c Q 2 Q opt = 2 C o D C c 1 - d p
  • 19. PRODUCTION QTY MODEL (con’t)… C c = $0.75 per yard C o = $150 D = 10,000 yards d = 10,000/311 = 32.2 yards per day p = 150 yards per day Q opt = = = 2,256.8 yards 2 C o D C c 1 - d p 2(150)(10,000) 0.75 1 - 32.2 150 TC = + 1 - = $1,329 d p C o D Q C c Q 2 Production run = = = 15.05 days per order Q p 2,256.8 150
  • 20. PRODUCTION QTY MODEL (con’t)… Number of production runs = = = 4.43 runs/year D Q 10,000 2,256.8 Maximum inventory level = Q 1 - = 2,256.8 1 - = 1,772 yards d p 32.2 150
  • 21. QUANTITY DISCOUNTS Price per unit decreases as order quantity increases TC = + + PD C o D Q C c Q 2 where P = per unit price of the item D = annual demand
  • 22. QUANTITY DISCOUNTS (con’t)… ORDER SIZE PRICE 0 - 99 $10 100 – 199 8 ( d 1 ) 200+ 6 ( d 2 ) Q opt Carrying cost Ordering cost Inventory cost ($) Q ( d 1 ) = 100 Q ( d 2 ) = 200 TC ( d 2 = $6 ) TC ( d 1 = $8 ) TC = ($10 )
  • 23. QUANTITY DISCOUNTS (con’t)… C o = $2,500 C c = $190 per computer D = 200 QUANTITY PRICE 1 - 49 $1,400 50 - 89 1,100 90+ 900 Q opt = = = 72.5 PCs 2 C o D C c 2(2500)(200) 190 TC = + + PD = $233,784 C o D Q opt C c Q opt 2 For Q = 72.5 TC = + + PD = $194,105 C o D Q C c Q 2 For Q = 90
  • 24. PROBABILISTIC MODELS Reorder Point = Level of inventory at which a new order is placed R = dL where d = demand rate per period L = lead time Demand = 10,000 yards/year Store open 311 days/year Daily demand = 10,000 / 311 = 32.154 yards/day Lead time = L = 10 days R = dL = (32.154)(10) = 321.54 yards Applicable when product demand or any other variable is not known but can be specified by means of a probability distribution
  • 25.
  • 26. Reorder point with variable demand R = dL + z  d L where d = average daily demand L = lead time  d = the standard deviation of daily demand z = number of standard deviations corresponding to the service level probability z  d L = safety stock
  • 27. Reorder Point with variable demand (con’t)… Probability of meeting demand during lead time = service level Probability of a stockout R Safety stock d L Demand z  d L
  • 28. Reorder Point with variable demand example The carpet store wants a reorder point with a 95% service level and a 5% stockout probability For a 95% service level, z = 1.65 Safety stock = z  d L = (1.65)(5)( 10) = 26.1 yards d = 30 yards per day L = 10 days  d = 5 yards per day R = dL + z  d L = 30(10) + (1.65)(5)( 10) = 326.1 yards
  • 29. Order Quantity for a Periodic Inventory System Q = d ( t b + L ) + z  d t b + L - I where d = average demand rate t b = the fixed time between orders L = lead time s d = standard deviation of demand z  d t b + L = safety stock I = inventory level
  • 30. Fixed-Period Model with Variable Demand d = 6 bottles per day s d = 1.2 bottles t b = 60 days L = 5 days I = 8 bottles z = 1.65 (no. of sd for a 95% service level) Q = d ( t b + L ) + z  d t b + L - I = (6)(60 + 5) + (1.65)(1.2) 60 + 5 - 8 = 397.96 bottles

Editor's Notes

  1. How do you manage your inventory? We‘ve been talking about inventory management in almost all our subjects..noh? Share about Junrex inventory.
  2. Inventory investment by achieving low cost strategy. And you can never achieve a low cost strategy without a good inventory management.. Bottom line is still all about increasing profitability
  3. No stockout. Like in retail stores when clients look for a certain item and its always available. Volume discounts, or ordering costs - Order processing, shipping and handling, 3. Economies of production?? Maybe carrying cost ( capital or investment-opportunity cost, Inventory risk costs , Space costs, Inventory service costs 4. Freight savings 5. Provide enough stock to protect from inflation 6. Oks 7. Maintain independence of supply chain??
  4. Rm – purchased materials still to be processed Wip – items or components that are not yet completed Mro – supplies necessary to keep machineries and processed productive FG – items ready to be sold
  5. You think 100% accuracy of inventory records is possible? Companies are buying software applications to maintain records of inventory.
  6. In retail or service businesses, extensive amount of inventory is being held and it deserves special amount of attention.
  7. But this chapter focuses on managing inventory where demand is INDEPENDENT We first need to understand costs associated with inventory management models Dependent Demand for items used to produce final products Tires stored at a Goodyear plant are an example of a dependent demand item Independent Demand for items used by external customers Cars, appliances, computers, and houses are examples of independent demand inventory
  8. We need to account daily production rate and the daily demand rate
  9. You will order when your inventory level reaches 321.54 yards
  10. For a service level: Stockout - an inventory shortage Service level - probability that the inventory available during lead time will meet demand
  11. What is periodic inventory system? When records are not maintained?
  12. Periodic system (fixed-time-period) = order placed for variable amount after fixed passage of time