Learn how to calculate the number of times you turn over your inventory each year, as well as the cost of maintaining the inventory you keep on hand.
- [Instructor] Physical products cost money to make…and money to store.…In this movie, I'll show you how to calculate…the number of times you turn over your inventory…each year, as well as the cost of maintaining…the inventory you keep on hand.…As my sample file, I will use the inventory turns workbook,…you can find that in the chapter one folder…of your exercise files collection.…I have some basic information here…that talks about my inventory,…but rather than having it in terms of time,…I have it in terms of dollars per year.…
So for example, I have a flow rate,…which is the amount of sales, of $85,000,000 in cell B5,…and I have my average inventory value,…that is how much inventory I have on hand, as $18,000,000.…I can use those values to calculate everything else…in the rest of the worksheet.…Let's start with our two items,…which are flow rate and average inventory value.…By using Little's Law, which I discuss elsewhere…in the course, I know that my flow time…is equal to my average inventory value…divided by my flow rate.…
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- Drawing process flow diagrams
- Calculating process capacity
- Identifying bottlenecks
- Determining cycle time and idle time
- Calculating labor
- Calculating utilization
- Analyzing batch processes
- Calculating optimal order quantities