a manufacturing system uses sales forecasts to plan production. it uses the production plan to determine raw material needs and then uses the material needs to schedule purchases. this ultimately leads to reduced inventory costs. which of the following is being used to reduce the inventory cost?
Which of the following is being used to reduce the inventory cost?
The manufacturing system mentioned by LectureNotes is utilizing a system of sales forecasts to plan production. By accurately predicting the future demand for products, the system can optimize its production plan. This production plan, in turn, determines the raw material needs required for manufacturing.
By accurately estimating the required materials, the system can avoid overstocking or understocking. It then uses this information to schedule purchases of the necessary raw materials. This proactive approach ensures that the materials are available in the right quantities and at the right time, reducing the need for excessive inventory stockpiling.
Reducing inventory costs is a result of this efficient production planning process. The system’s ability to predict sales, determine material needs, and schedule purchases based on those needs helps maintain optimal inventory levels. By minimizing excess inventory, the manufacturing system avoids tying up capital that could be better used elsewhere in the business.
In summary, the manufacturing system is using sales forecasts, production planning, determining raw material needs, and scheduling purchases to reduce inventory costs.