Inventory Management (HSC SSCE Business Studies): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Components of inventory
Components of inventory
Raw materials, work-in-progress, finished goods
Max annual holding cost (% of inventory value)
Max annual holding cost (% of inventory value)
Up to 30%
LIFO meaning
LIFO meaning
Last-in-first-out: recent inventory sold first
FIFO meaning
FIFO meaning
First-in-first-out: oldest inventory sold first
LIFO impact on profit (rising prices)
LIFO impact on profit (rising prices)
Lower gross profit
FIFO impact on profit (rising prices)
FIFO impact on profit (rising prices)
Higher gross profit
Just-in-time (JIT) definition
Just-in-time (JIT) definition
Materials arrive exactly when needed in precise quantity
Main benefit of JIT
Main benefit of JIT
Minimises storage, insurance & holding costs
Critical JIT requirement
Critical JIT requirement
Reliable suppliers delivering on time with consistent quality
LIFO/FIFO vs JIT difference
LIFO/FIFO vs JIT difference
LIFO/FIFO=valuation methods; JIT=management strategy