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Operations Management: Processes and Supply Chains, 12th Edition by Larry P. Ritzman, Manoj K. Malhotra, Lee J. Krajewski

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Measuring Supply Chain Performance

Regardless of whether the supply chain supports services or manufacturing, managers need performance measures to assess the implications of changes to supply chains. Before discussing the major supply chain design decisions, we define the typical inventory measures and financial measures used to monitor supply chain performance and evaluate alternative supply chain designs.

Inventory Measures

All methods of measuring inventory begin with a physical count of units, volume, or weight. However, measures of inventories are reported in three basic ways: (1) average aggregate inventory value, (2) weeks of supply, and (3) inventory turnover.

The average aggregate inventory value is the total average value of all items ...

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