Copyright?2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin6-*CHAPTER6InventoryManagementCopyright?2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin6-*PurposesofInventoryEnablesthefirmtoachieveeconomicsofscaleBalancessupplyanddemandEnablesspecializationinmanufacturingProvidesprotectionfromuncertaintiesindemandandordercycleActsasabufferbetweencriticalinterfaceswithinthesupplychainCopyright?2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin6-*TheEffectofReorderQuantityonAverageInventoryInvestmentwithConstantDemandandLeadTimea6-3a2004000Days102030405060InventoryOrderplacedOrderarrivalOrderplacedAveragecycleinventoryA.Orderquantityof400unitsOrderarrivalCopyright