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Inventory Optimization
Inventory optimization is a method of balancing capital investment constraints or objectives and service-level goals over a large assortment of stock-keeping units (SKUs) while taking demand and supply volatility into account. Inventory management challenges Every company has the challenge of matching its supply volume to customer demand. How well the company manages this challenge has a major impact on its profitability. In contrast to the traditional "binge and purge" inventory cycle in which companies over-purchase product to prepare for possible demand spikes and then discards extra product, inventory optimization seeks to more efficiently match supply to expected customer demand. APQC Open Standards data shows that the median company carries an inventory of 10.6 percent of annual revenues as of 2011. The typical cost of carrying inventory is at least 10.0 percent of the inventory value. So the median company spends over 1 percent of revenues carrying inventory, although for ...
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Long Tail
In statistics and business, a long tail of some distributions of numbers is the portion of the distribution having many occurrences far from the "head" or central part of the distribution. The distribution could involve popularities, random numbers of occurrences of events with various probabilities, etc. The term is often used loosely, with no definition or an arbitrary definition, but precise definitions are possible. In statistics, the term ''long-tailed distribution'' has a narrow technical meaning, and is a subtype of heavy-tailed distribution. Intuitively, a distribution is (right) long-tailed if, for any fixed amount, when a quantity exceeds a high level, it almost certainly exceeds it by at least that amount: large quantities are probably even larger. Note that there is no sense of ''the'' "long tail" of a distribution, but only the ''property'' of a distribution being long-tailed. In business, the term ''long tail'' is applied to rank-size distributions or rank-freq ...
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Castrol
Castrol is a British oil company that markets industrial and automotive lubricants, offering a wide range of oil, greases and similar products for most lubrication applications. The name ''Castrol'' was originally just the brand name for company's motor oils, but the company eventually changed its name to ''Castrol'' when the product name became better-known than the original company name ''CC Wakefield''. Since 2000, Castrol Limited has been a subsidiary of BP, which acquired the company for $4.73 billion. History The "Wakefield Oil Company" was founded by Charles Wakefield in 1899. Wakefield had previously left a job at Vacuum Oil to start a new business in London, selling lubricants for trains and heavy machinery. The company launched its first lubricant in 1906. The new business was established in Cheapside in London to commercialise lubricants for trains and other heavy machinery. Eight former Vacuum Oil employees joined Wakefield in his new company. In early ...
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Mathematical Optimization
Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfields: discrete optimization and continuous optimization. Optimization problems of sorts arise in all quantitative disciplines from computer science and engineering to operations research and economics, and the development of solution methods has been of interest in mathematics for centuries. In the more general approach, an optimization problem consists of maximizing or minimizing a real function by systematically choosing input values from within an allowed set and computing the value of the function. The generalization of optimization theory and techniques to other formulations constitutes a large area of applied mathematics. More generally, optimization includes finding "best available" values of some objective function given a defi ...
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Logistics
Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics manages the flow of goods between the point of origin and the point of consumption to meet the requirements of customers or corporations. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items. In military science, logistics is concerned with maintaining army supply lines while disrupting those of the enemy, since an armed force without resources and transportation is defenseless. Military logistics was already practiced in the ancient world and as the modern military has a significant need for logistics solutions, advanced implementations have been developed. In military logistics, logistics officers manage how and when to move resources to the places they are needed. Logistics management is the part of supply chain management and supply chain engine ...
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Supply Chain Management
In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain. Supply-chain management has been defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally". SCM practice draws heavily on industrial engineering, systems engineering, operations management, l ...
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Inventory Theory
Material theory (or more formally the mathematical theory of inventory and production) is the sub-specialty within operations research and operations management that is concerned with the design of production/ inventory systems to minimize costs: it studies the decisions faced by firms and the military in connection with manufacturing, warehousing, supply chains, spare part allocation and so on and provides the mathematical foundation for logistics. The inventory control problem is the problem faced by a firm that must decide how much to order in each time period to meet demand for its products. The problem can be modeled using mathematical techniques of optimal control, dynamic programming and network optimization. The study of such models is part of inventory theory. Issues One issue is infrequent large orders vs. frequent small orders. Large orders will increase the amount of inventory on hand, which is costly, but may benefit from volume discounts. Frequent orders are co ...
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Inventory
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shape and placement of stocked goods. It is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials. The concept of inventory, stock or work in process (or work in progress) has been extended from manufacturing systems to service businesses and projects, by generalizing the definition to be "all work within the process of production—all work that is or has occurred prior to the completion of production". In the context of a manufacturing production system, inventory refers to all work that has occurred—raw materials, partially finished products, finished products prior to sale and departure from the manufacturing system. ...
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Smiths Group
Smiths Group plc is a British, multinational, diversified engineering business headquartered in London, England. It operates in over 50 countries and employs 14,600 staff. Smiths Group has its origins in a jewellery shop, ''S Smith & Sons'', which was founded by the watchmaker and businessman Samuel Smith. Supplying its precision watches to various clients, including the Admiralty, the business quickly grew and expanded into a major provider of timepieces, diamonds and automotive instrumentation. On 21 July 1914, the business became a public limited company, holding onto this status for over a hundred years. Throughout much of the twentieth century, Smiths Group was the principal supplier of instruments to the British motorcar and motorcycle industries, organising itself as ''Smiths Industries'' Ltd in 1960. Its main activities now are the manufacture of sensors that detect and identify explosives, products and services for the major process industries, products that connect, ...
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Electrocomponents
RS Group plc (formerly Electrocomponents plc) is a distributor of industrial and electronics products based in London, England. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. History The company was founded by J.H. Waring and P.M. Sebestyen as ''Radiospares'' in London in 1937. It supplied radio repair shops with spare parts – replacement electronic components and mechanical components for radio receivers and transmitters. When television sets became popular, the company added television parts to their product list. By the end of the Second World War, the company had evolved into a large national distribution company. In 1954, the founders of Radiospares expanded the company's focus from shops and home users to the industrial sector and began selling electronic components to manufacturers. The company was first listed on the London Stock Exchange as ''Electrocomponents'' in 1967. It opened a distribution centre at Corby in Northampt ...
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Bullwhip Effect
The bullwhip effect is a supply chain phenomenon where orders to suppliers tend to have a larger variability than sales to buyers, which results in an amplified demand variability upstream. In part, this results in increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain. The concept first appeared in Jay Forrester's ''Industrial Dynamics'' (1961) and thus it is also known as the Forrester effect. It has been described as “the observed propensity for material orders to be more variable than demand signals and for this variability to increase the further upstream a company is in a supply chain”. Science at Stanford University helped incorporate the concept into supply chain vernacular using a story about Volvo. Suffering a glut in green cars, sales and marketing developed a program to sell the excess inventory. While successful in generating the desired market pull, manufacturing did not know about the promotional plans. ...
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Discounted Cash Flow
The discounted cash flow (DCF) analysis is a method in finance of valuing a security, project, company, or asset using the concepts of the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management and patent valuation. It was used in industry as early as the 1700s or 1800s, widely discussed in financial economics in the 1960s, and became widely used in U.S. courts in the 1980s and 1990s. Application To apply the method, all future cash flows are estimated and discounted by using cost of capital to give their present values (PVs). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value of the cash flows in question; see aside. For further context see valuation overview; and for the mechanics see valuation using discounted cash flows, which includes modifications typical for startups, private equity and venture cap ...
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International Data Corporation
International Data Group (IDG, Inc.) is a market intelligence and demand generation company focused on the technology industry. IDG, Inc.’s mission is centered around supporting the technology industry through research, data, marketing technology, and insights that help create and sustain relationships between businesses. IDG, Inc. is wholly owned by Blackstone and is led by Mohamad Ali, who was appointed CEO of the company in 2019. Ali serves on IDG, Inc.’s leadership team along with IDC President Crawford Del Prete, IDG, Inc.’s Chief Financial Officer Donna Marr, and Foundry President Kumaran Ramanathan. IDG, Inc. is headquartered in Needham, MA and is parent company to both International Data Corporation (IDC) and Foundry (formerly IDG Communications). History International Data Group was initially founded as International Data Corporate (IDC) in 1964 by Patrick Joseph McGovern, shortly after he had graduated from the Massachusetts Institute of Technology (MIT). Bas ...
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