December 2012
Intermediate to advanced
561 pages
22h 33m
English
Content preview from Logistics Management ,3rd Edition by Pearson
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130 • Logistics Management
However, the investment in inventory has implica-
tions on the bottom line of the fi rm. The inventory-
carrying cost consists of the cost of the funds
invested in inventory; its handling cost; damage
and obsolescence cost; and opportunity cost. The
carrying cost is approximately 18–20 per cent of the
investment in inventory. In the supply chain sys-
tem, inventory is viewed as a liability that reduces
both profi ts and return on investment. For making
the supply chain leaner, fi rms today use selective
control techniques such as EOQ, ABC, EVD and
FMS, as well as inventory control models such as
MRP, DRP, JIT, VMI and AITS. ...
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