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What is Cycle Inventory and Economies of Scale about?

This document discusses cycle inventory and economies of scale in supply chain management. Cycle inventory is the average inventory that builds up due to purchasing or producing goods in batches larger than customer demand. It allows companies to take advantage of lower costs from ordering in bulk. The optimal batch size, called economic order quantity, balances material, ordering, and holding costs. Cycle inventory equals half the batch size and impacts average flow time and working capital requirements.

Author

Samima Akteri

Language

EN