Chapter 13 the Expenditure Cycle: Purchasing to Cash Disbursements

1) Define and describe the EOQ approach to inventory management.Page Ref: 378
Economic order quantity approach is the process of calculation an optimal order size to minimize
the sum of ordering, carrying, and stock out costs.
2) Discuss the differences between EOQ, MRP, and JIT.Page Ref: 378EOQ-
Economic order quantity approach is the process of calculation an optimal order size to minimize
the sum of ordering, carrying, and stock out costs.
MRP- seeks to reduce required inventory levels by improving the accuracy of forecasting
techniques to better schedule purchases to satisfy production needs.
JIT - attempts to minimize, if not totally eliminate, finished goods inventory by purchasing and
producing goods only in response to actual, rather than forecasted sales.