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Drop-downs 1-2 just in case, just in time 3-4 placing and receiving an order, preparing equipment and facilities to produce a component. 5-6 holding inventory, not having a product available when demanded by customer 7 price decreases, quantity discounts 8 demand uncertainty, quality discounts 9-15 yes or no

Excessive amounts of inventory can prove to be very costly. There are many ways to manage inventory costs, including the EOQ model, JIT, and the theory of constraints (TOC). All three methods offer ways of reducing inventory costs. The best approach usually depends on the nature of the organization as well as the nature of the inventory itself. The Economic Order Quantity (EOQ) model follows a inventory management approach. The inventory management approach is a traditional that tries to anticipate demand and then push through products to meet this demand. Three types of inventory costs can be identified: (1) the cost of acquiring inventory (other than the cost of the good itself), (2) the cost of holding inventory, and (3) the cost of not having inventory on hand when needed. Ordering costs are the costs of m. Setup costs are the costs of v. Carrying costs are the costs of m. Stock-out costs are the costs of There are many reasons offered to justify the holding of inventories. For example, organizations may acquire inventories to take advantage of . Similarly inventories of finished goods may be carried because of Select "Yes or No" for the following conditions in which inventory buffers of parts and materials are needed additionally. Late deliveries from suppliers Unavailable parts Need to balance ordering and carrying costs To hedge against future price increases Strikes or bad weather To minimize carrying costs To take advantage of a price decreasing trend