...should not be seen as obviating the need for the ABC inventory classification scheme. Although the cost of computing has decreased considerably, the cost of data acquisition has not decreased in a similar fashion. Business organizations still have many items for which the cost of data acquisition for a “perpetual” inventory system is still considerably higher than the cost of the item. The standard EOQ model assumes instantaneous delivery (delivery of the entire lot is made at one instant of time), whereas the Production Inventory Model assumes that delivery takes place at a constant rate over time. 3. Reasons for an organization to maintain inventory include: * The decoupling function: * inventory can be used to decouple stages in the production process within an organization * inventory can be used to decouple the production process from instabilities or irregularities in supply of raw materials or labor * inventory can be used to decouple the production process from unstable demand and thus (a) allow production scheduling to develop a “smoother” schedule, and (b) avoid shortages or stockouts * Quantity discounts: * inventory can be used to enable the organization to purchase goods in larger lot sizes and take advantage of quantity discounts * A hedge against inflation: * investing in inventory now assures one that the price will not increase 4. Costs that are associated with ordering and maintaining inventory include: * Initial purchase cost of the item...
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...ACCT 6610 Group Assignment Analysis of ExxonMobile Inventories Obtain a copy of ExxonMobil’s 2011 10-K, which was filed with the SEC on February 24, 2012. According to ExxonMobile’s description of their business, “ExxonMobil is a major manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. ExxonMobil also has interests in electric power generation facilities.” Using information in the financial statements and footnotes respond to the following questions in the spaces provided. You must show the details of your computations to be eligible for partial credit. Answer questions for 2011 only, unless specifically asked to do otherwise. Limit you analysis to ExxonMobile’s crude oil, products and merchandise. Ignore materials and supplies. Assume a 35% tax rate if needed. 1. As of the end of 2011, what is the cumulative amount of the holding gain ExxonMobile has experienced on its inventories accounted for using LIFO? What is the cumulative amount at the end of 2010? Which footnote provided the information to answer this question? (3 points) • In millions of dollars (see table below). • [pic] (1 point each) • Footnote #3 “Miscellaneous Financial Information” (1 point) • The cumulative holding gain is called the ‘aggregate replacement cost’ in the inventory footnote 2. Estimate the replacement cost of ExxonMobile’s...
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...the inventory control system for XXXXX and describe its purpose, critical aspects and objectives. This report will review its faults and challenges, then describe solutions which will produce measurable results. Purpose of an Inventory Control System The inventory control system is the mechanism within a company that is used for efficient management of the movement and storage of raw material, work in process, finished goods, effective utilization of people and equipment, and the communication of this information within the organization and its customers. The inventory control system provides the vital information needed for managers to make decisions. Critical Aspects and Objectives of an Inventory Control System The main goals of an inventory-control system are distributing product to customers on time and as cost-effectively as possible. With this said, the main objectives of the inventory control system are to avoid back-orders while avoiding excess inventory, provide for the efficient movement of goods, and to maximize profit margins while maintaining sustainable cash flow. Avoiding back-orders: Back-orders are costly. You want to make sure that the company has sufficient stock on hand to deliver to customers when they want the product. A defined replenishment system is critical to maintain inventory at sufficient levels to meet customer demands. Seeing as it costs time and money to promote products and attract customers, it is important to have inventory on hand...
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...Case Analysis- Inventory or Property Plant and Equipment Overview and Introduction Red Hen Company, which operates for producing and processing and selling fresh eggs. After its first year, it began to prepare financial statements. However, the accountancy found it’s hard to identify these egg-producing flocks as inventory or as property, plant and equipment. This essay will cite accounting standards and rules from FASB, identifying the definitions related to inventory and fixed asset, and discuss the related details in company’s specific situation. Finally, the essay will provide recommendations on how to present the hens in the financial statement, and draw a conclusion based on the previous recommendations. Identification Based on Accounting Principles and Specific Situation When preparing financial statements at the end of its first operating years, Red Hen Company has to identify the classification of its egg-laying flocks. Whether the items should appear in the inventory section under the current asset, or be treated as fixed asset? Admittedly, the egg-laying flocks can be identified as fixed asset (Property, plant, and equipment), which used to create and distribute an entity’s products and services [FASB ASC 360-10-05]. Specifically, egg-laying flocks could be treated as equipment. [FASB ASC 905-360-25-4] points out “except for animals with short productive lives classified as inventory, breeding animals, livestock (which includes cattle, hogs, sheep, and goats)...
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...Analysis Of Scientific Glass Inventory Management Finance EssayAnalysis Of Scientific Glass Inventory Management Finance Essay The products of Scientific Glass include customized and specialized glassware for a variety of organizations such as pharmaceutical companies, hospitals, research labs, quality-control sites and testing facilities. By January 2010, a substantial increase in their inventory balances tied up the capital needed for investment for expansion. The debt-to-capital ratio exceeded the 40% target preventing the company to use their capital in other areas. Also the shipping costs were rising, competitive pressures were speeding up, and certain markets in North America and Europe were becoming saturated which underscored the necessity for capital investment for expanding market opportunities in Latin America and Asia. Moreover, expanding warehousing network increased the inventory levels along with costs, documentation complexities and errors. The company hired a new Manager of Inventory Planning, Ava Beane, to come up with an effective plan to manage SG’ s inventory without requiring a large capital investment. In order to finance operations in year 2010, SG requires an external funding of $53.8 million. These expenses would further limit the company to use their existing capital in other areas such as research and development and expanding to international markets. To improve customer service levels, SG had increased the target customer fill rate to 99% and added...
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...MANAGEMENT 1. What do you understand from integrated materials management? What are the obstacles encountered to make this approach effective? 2. Name the industry and the products for which materials requirement planning technique would be suitable than economic order quantities and explain why? 3. What do you understand from Materials Requirement Planning (MRP)? What are its advantages over conventional tools of inventory planning? Which types of industries have use of this technique ? 4. Why should purchase department participate in product development ? Explain to what extent it is practiced in Indian Industry ? 5. Describe the procedure to be followed for the purchase of an item until payment of the bill. Indicate the controls involved. 6. What are blanket orders ? What are their salient features ? For what type of items is this method of buying suitable ? 7. How will you organize buying of seasonal commodities? Explain giving examples ? 8. How does “Buying under risk” differ from “Buying under uncertainty” ? Give a comparative analysis of the two methods ? 9. What are the responsibilities of receiving stores ? What are the different types of materials received in the organization ? 10. What is pallet ? What are the different types of pallets used in the industry? Describe in brief the advantages of palletisation ? 11. Define logistics management. Explain briefly the benefits that can accrue to the organization from the successful implementation...
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...EXECUTIVE SUMMARRY Name Institutional Affiliation Executive Summary Inventory turnover is the measure of the speed in turning over its inventory with a given annual trading period. That entails calculating the cost of goods sold then dividing the same with average inventory. Inventory to revenue ratio determines the ability of a company to manage their inventory levels. The auto parts industry is associated with finding innovative techniques necessary in keeping new firms from entering the industry as well as the existence of strong-reliable relationships with suppliers and brand recognition. That is essential in for companies to survive and compete in the industry given the severity of identical products which makes it hard to differentiate one business’ products from hat of the competitors. The focus of this paper is on the comparative analysis of inventory turnover of AutoZone and Advance Auto Part companies. That follow a thorough research into the operations and performance of these two companies. To begin with, AutoZone is among the cost leader in the automotive industry with reputation for its excellent customer service which that company uses as a strategy of differentiation from the competitors. The company has manged to satisfy all the key success factors and as such, it has a competitive advantage over others. A close look at AutoZone’s financial behaviour and policies reveals that the company makes use of a mixed accounting strategy when preparing its...
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...From: Danilo; Gustavo Bueno; Jacob Broberger; Joep Laureijs; José Adriano Machado Subject: Group 2’s analysis of Managing Earnings by Manipulating Inventory: The Effects of Cost Structure and Valuation Method Introduction In this memo, we intend to analyze and breakdown Managing Earnings by Manipulating Inventory: The Effects of Cost Structure and Valuation Method by Kirsten A. Cook, Ryan Houston & Michael R. Kinney’s major faults and weak-points. The article examines how production cost structure and inventory valuation affect a company’s earning management through inventory manipulation. Its two main findings are the following: i. Firms with high fixed-cost ratios are more likely to manipulate production but make smaller abnormal inventory changes than companies with low fixed-costs ratios; ii. LIFO firms are less likely than other companies to manage earnings by using the production lever (i.e. shifting fixed costs between COGS and inventory) because they may also manage earnings by liquidating LIFO layers and releasing the LIFO reserve. Before we begin our analysis, we put together a brief rundown of the essential concepts the article’s authors go through to form their conclusions. Cost Structure Cost structure refers to the types and relative proportions of fixed and variable costs that a business incurs. Valuation methods A company can value its inventory using several methods. The two most important methods are LIFO (“last in first out”) and FIFO (“first...
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...I’m on the prowl, like a terrier hunting an unknowing squirrel. I shuffle between the racks of Lululemon clothes and blissful shoppers. I am not here to shop. I am here to take inventory. I mentally note the colors of the leggings and the patterns, designs and styles of the shirts. After committing such details to my long-term memory I leave the store. I am ready. The straw straps imprint upon my skin, while my arm muscles are weighted down by the Outlet shopping bags. This is a feeling I know well, too well. My mother, my partner in crime, is besides me as we near the Lululemon outlet store. My right hand grasps onto the half-circled door handle and I pull the door ajar—it’s go time. Upon entering the store, I remain calm, at least externally. My eyes immediately begin to scan the store, looking for the colors, patterns, and designs I had noted at the Lululemon store in our mall. I smile at the employee who had greeted my mother and I on entering. I shut my eyes, inhale deeply, and continue further into the abyss of clothes....
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...Ethics Awareness Inventory Analysis GEN 480 Interdisciplinary Capstone Course I 4 April 2011 Dr. Joel Ginsburg Ethics Awareness Inventory Analysis Ethics is important to everyone for the society as a whole. Whether it is in a person’s professional career or personal life, ethics and morals play an important role. The key to an organization’s success is the way they handle business ethically. Although it is not always simple to do the right thing, it is something that must be done. Conducting an Ethics Awareness Inventory is a way someone can learn how they as individuals see ethics; what is important to them the most, and what is important to them the least. I completed this inventory, and will discuss how it relates to my personal and professional development, how my educational experience has affected my way of thinking ethically, how I use ethics in thinking and decision making, and the potential for situations to arise with others that have a different interpretation of ethical behavior. I have not yet decided what I want to do career wise. Currently, I have short-term in long-term goals that are a part of my professional development. In my personal life, it is important that I can provide for my family financially and emotionally. That is one of the main reasons why I have chosen to return to school as an adult. I also wish to become a father that my children can look up to. Having an education is one of the first steps. I try and do the right thing in my...
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...Ethical Awareness Inventory Analysis Gen/480 Ethical Awareness “You tend to base your ethical perspective on what it is good to be, rather than what it is good to do” (The Williams Institute for Ethics and Management, 2012). My ethical awareness inventory scored predominantly high in the character-based perspective. As this inventory states, “Good people demonstrate good actions” (The Williams Institute for Ethics and Management, 2012). I believe the basis for this ethical perspective comes from the fact that I was raised in and still practice Christianity. “The process of living out one’s values is more important than the outcome of a decision” (The Williams Institute for Ethics and Management, 2012). I don’t know that I would consider this to be true of myself. I had a negative number in the results perspective. As an entrepreneur I do value results. I have owned businesses before where I had to let employees go because they negatively affected the bottom-line. I knew that if I allowed the current arrangement to continue the entire business would close and everyone would be out of a job not just the employee who role was no longer a contribution to the bottom-line. That being said I would never make a decision that was dishonest, deceptive or intestinally destructive to anyone for self-preservation. The section of the EAI that identified frustrations are both accurate and ridiculous. The ridiculous is from the foundational pre-supposition that “not everyone has an...
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...Ethics Awareness Inventory Analysis Ethics Awareness Inventory Analysis According to my Ethics Awareness Inventory Scoring Summary I learned my ethical profile is most closely aligned with obligation and least closely aligned with equity. I interpret the obligation part of my ethical profile as my decisions are based on obligation, responsibility, and devotion. I make moral decisions based on my upbringing and my personal and professional experiences. Growing up I was taught to respect, to have dignity, to want the best for every person, and to treat others equally. I feel an obligation to treat everyone equally. I believe every person should be free to make his or her own decisions. I interpret the lack of the equity part of my ethical profile as sometimes having difficulty making fair and impartial decisions. I will sometimes make ethical decisions based on experience, knowledge, and current circumstances versus what is right or wrong. I can admit I have an inclination to change my beliefs based on experience, knowledge, and current circumstances. Personal Development My educational and professional experiences have affected my ethical thinking, decision-making, and how I react to conflict in situations where people have different interpretations of ethical behavior. My educational experiences have thought me to behave with integrity, show excellent character, take responsibility seriously, and to follow through. These characteristics have given me a solid ethical...
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...Running Head: LIFE STYLE INVENTORY ANALYSIS GM 591 – Leadership and Organizational Behavior Professor Angie Bailey 14 September 2008 The Life Style Inventory (LSI) developed by Dr. J. Clayton Lafferty is a tool that people can use to help analyze different aspects of one’s thought processes and behavior in order to actualize various leadership traits. The intent of the LSI survey is for the user to come away with a heightened awareness of traits that will most likely improve their ability to lead and those that may be preventing them from exhibiting enhanced managerial skills. In this essay, I will describe the results I achieved from this survey, how they impact my encounters with my co-workers and employees, as well as reflect on certain situations in my life that have encouraged the traits that I see in myself. My primary personal thinking style was determined to be the Self-Actualizing Style. Self-actualizing leaders tend to have high confidence levels and a healthy outlook that can positively affect relationships and effectiveness in work through an acute awareness of both their own and others’ feelings (Lafferty, n.d.d). This style is also characterized by a “healthy sense of self worth, concern for self development, strong instincts and intuition, and relative freedom from guilt or worry” (Lafferty, n.d.d). I do feel like this accurately portrays my thoughts on leadership even though I couldn’t accurately explain why before. When I deal...
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...INVENTORY MANAGEMENT INTRODUCTION Inventory is a detailed list of movable goods such as raw materials, work in progress, finished goods, spares, tools, and consumables, general supplies which are necessary to manufacture products and to maintain the plant and machinery in good working condition. Generally, Inventory refers to the materials in stock. Inventory management is the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. RATIONALE OF KEEPING INVENTORY Every organization should consider keeping inventory for the following major reasons: a. To keep pace with changing market conditions Organizations have to anticipate the changing market sentiments and they have to stock materials in anticipation of non-availability of materials or sudden increase in prices. b. To prevent loss of sales/ orders In a competitive scenario, one has to meet the delivery schedules at 100 percent service level, they cannot afford to miss the delivery schedule which may result in loss of sales. c. To take advantage of price discounts Manufacturers offer discount for bulk buying and to gain this price advantage the materials are bought in bulk even though they are not required immediately. d. To meet the demand during replenishment period The lead time for procurement of materials depends upon...
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...phase of the supply process. Metrics establish standards of efficiency and an adequate median to accommodate for the product demand. The Supply Chain Cycle Time and Inventory Analysis will be evaluated to measure the efficiency of the electric fan supply chain. Analysis and improvements of the Supply Chain Cycle Time and Inventory Analysis can result increase the competitive advantage of Riordan with other businesses in the industry. The analysis of the Supply Chain Cycle Time allows managers to identify the time to fill a customer order in the absence of an existing inventory. A short cycle time may be a strong indication of an efficient time to manufacture the product. The time needed to meet the demand of customers is essential to establishing a customer base and increasing revenues. Products must be manufactured within sufficient time to meet the demand of customers to avoid cancelled orders and excess inventory. Riordan manufactures standard and custom bottles based on an annual contract consisting of quantities forecasted by customers (Apollo Group, Inc. 2004). Smaller quantities are also released throughout the year by customer request (Apollo Group, Inc. 2004). Managers must perform regular analysis of Days-In-Inventory to mitigate the impact of excessive stock and implement lean production methodology. Inventory reduction principles will increase revenues and because of income generated from sales....
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