The Whole Life Asset Management (L4M7)

Explanation

Holding costs (carrying costs) are the costs associated with the storage and handling of physical stock. There are two different types of holding costs:

- Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied up in inventory, which may be the bank borrowing rate or the company ' s target for return on capital); cost of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of inventory; losses due to theft, accidental damage etc.

- Costs related to the physical characteristics of the inventory include the following: storage space; power, heat and lighting of the store; movement equipment; labour costs; administration costs.

Explanation

Last in, first out (LIFO) is a method used to account for inventory that records the most recently produced items as sold first. Under LIFO, the cost of the most recent products purchased (or pro-duced) are the first to be expensed as cost of goods sold (COGS)—which means the lower cost of older products will be reported as inventory.

Moving average: a calculation to analyse data by creating series of averages of different subset of full data set. It is commonly used with time series data to smooth out short-term fluctuation and highlight long-term trends or cycle

ABC analysis is a method of analysis that divides the subject up into three categories: A, B and C.

There is no technique called time-weighted series.

LO 2, AC 2.3

Explanation

The total cost of ownership would be the sum of all estimated costs.

The costs are as the following:

- Purchase price: $1,000

- Electricity consumption: $200

- Extended warranty: $75

Total expense = $1,000 + $200 +$75 = $1,275. Then subtract the resale price from this sum, the total cost of ownership is $1,025.

Explanation

Mounting or embedding RFID tags on metal can be tricky. Metal surfaces reflect energy emitted from RFID readers and create interference for RFID tag antennas, which means the tag isn ' t able to receive power and transmit information; however, specific RFID tags will work around metal sur-faces. RFID companies have patented technology that allows RFID to work when attached to metal surfaces and even embedded within metal products. As long as you choose the correct RFID equipment for your environment and application, you won ' t need to worry about interference from metal.

Explanation

Stockout is a situation where an inventory item is not available when required. The costs associated with a stockout include the following:

- Lost of production output - there will be no production until the stockout is resolved (new stock is acquired). For factory operating 24/7 with no spare capacity, this lost output will not be able to be recovered.

- Costs of machine downtime and of overhead spread over a reduced level of output

- Costs of any action required to deal with the stockout...

- Loss of customer goodwill through inability to supply or late delivery

- Loss of sales or new orders

- Loss of market creditability

A life cycle asset management plan provides a comprehensive framework for planning, budgeting, and resource allocation throughout the asset ' s life. It considers costs from acquisition to disposal, ensuring that assets are managed efficiently and cost-effectively over their full lifecycle, which is central to whole-life asset management strategies.

RFID technology, while advanced, has several limitations:

Cost : RFID can be expensive, particularly for smaller operations.

Reading limitations with certain materials : Liquids and metals can interfere with RFID signals, limiting their effectiveness.

Interference : Devices such as radios can disrupt RFID systems, reducing reliability.

In whole-life asset management, these disadvantages may affect the decision to implement RFID, especially in cost-sensitive or materials-sensitive applications.

Significant coding with sequential numbering assigns codes that reflect specific product attributes (e.g., wattage, type) with an added sequential number for unique identification. This approach facilitates easy identification and tracking, an essential feature in whole-life asset management for maintaining organized inventory records.

Low stock levels can lead to:

Delays and higher fulfillment costs : When stock is insufficient, emergency orders and expedited shipping may be necessary, increasing costs.

Stockouts during high demand : Insufficient inventory can lead to missed sales opportunities, negatively impacting customer satisfaction.

Whole-life asset management seeks to balance inventory levels to avoid stockouts while minimizing holding costs.