Warehousing and Logistics Essay Example

that offer lower prices per piece constitute good deals when provided by vendors.

This spreadsheet will assist you in making a wise choice as it compares the lower cost per piece with the cost of holding inventory for a longer duration. Additionally, it considers the reduced reordering cost per unit that arises from purchasing larger quantities.

The quantity that offers the lowest Total Cost/Piece is considered the "best buy". Spreadsheet 3: Price Break (Vendor Line) compares the discount you will receive to the cost of carrying each purchase quantity for the necessary selling time (based on your current overall forecast for the vendor line). This calculation determines the cost of each dollar's worth of inventory, taking into account both the discount and carrying cost. The lower the cost per dollar's worth of material, the more favorable the deal.

The text discusses two spreadsheets with accompanying instructions and materials. Firstly, Spreadsheet 4: Price Break (Terms/Freight) allows one to analyze various factors such as freight, term discounts, and extended terms to determine the optimal purchase quantity. Second, Spreadsheet 5: Value of Lost Inventory calculates the additional sales necessary to compensate for lost, stolen, or unusable materials. Both spreadsheets, along with printed versions and detailed instructions, are included on a CD-ROM and packaged in a durable binder.