# ALY 6050 Northeastern University IMOD4 nventory Management Decision Model Project

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Pbeirggr333

Economics

ALY 6050

Northeastern University

ALY

## Description

In this project, you will design a prescriptive model for an inventory problem. Furthermore, you will obtain “optimal” solution(s) of your model both in the absence and the presence of uncertainty.

Problem:
Inventories represent a considerable investment for every organization; thus, it is important that they be managed well. Excess inventories can indicate poor financial and operational management. On the other hand, not having inventory when it is needed can also result in business failure. The two basic inventory decisions that managers face are how much to order or produce for additional inventory, and when to order or produce it to minimize total inventory cost, which consists of the cost of holding inventory and the cost of ordering it from the supplier.

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Inventory Management

Student Name
Institution Affiliation
Inventory Management
Instructors Name
Due Date

1

INVENTORY MANAGEMENT

2
Inventory Management.

QUESTION ONE
Data (constants; Expenditures, machinery capacity, intercity routes):
Yearly Demand per Unit: 15,000
Cost per Unit: \$80
➢ Independent Inputs (Market conditions is something over which the policymaker has
no absolute power):
➢ Expenditures per Order (Supplier): \$220
➢ Aspects that influence decisions (The policymaker is in charge and has flexibility;
Quantities produced, and personnel). Price of a Chance for one year= 18 %.

QUESTION TWO
Definitive symbols for every variable in the model:
D = Yearly demand Unit
C = Unit Cost (Fixed)
S = Cost of Supplier for every order
O = Percentage of Opportunity cost, an annual inventory held.
Step1: Yearly cost of ordering.
AOC = (D*C) + S

AOC = (15,000*\$80) + \$220 = \$1,200,220

Step 2: Annual Inventory Cost
Annual Inventory Cost = (Yearly demand Unit*Unit Cost) Percentage of Opportunity Cost
Annual Inventory Cost = (15,000*\$80).18 = \$216,000
Step 3: Sundry Expenses
Total Cost = AOC + Annual Inventory Cost
Threfore; Total Cost = (1,200,220 + \$216,000)
= \$1,416,220

QUESTION THREE.
Attached Excel Sheet.

INVENTORY MANAGEMENT

3

QUESTION FOUR
Important Component of the Engine.
Data

Fixed.Order

1,000.00
Yearly.Ordering
Expenditure
Yearly.Demand 15,000.00

2,000.00
3,000.00

Cost per Unit

\$

80

4,000.00

Expenditure per
Order
(Supplier)

\$

220

5,000.00

6,000.00
Total.

\$ 1,200,220
.00

7,000.00
8,000.00

Annual
Inventory Cost
Opportunity
Cost

9,000.00
0.2

10,000.00
11,000.00

Total.

\$
216,000.00

12,000.00
13,000.00

Total.Cost.

\$
1,416,220.00

14,000.00

Expenditure
\$
1,416,220.00
\$
94,620.00
\$
189,020.00
\$
283,420.00
\$
377,820.00
\$
472,220.00
\$
566,620.00
\$
661,020.00
\$
755,420.00
\$
849,820.00
\$
944,220.00
\$
1,038,620.00
\$
1,133,020.00
\$
1,227,420.00
\$
1,321,820.00

QUESTION FIVE.
All optimal order component projections below 15,000 coincided with the Solver
approach. See the Excel Sheet for further information.

1ST
INSTANCE

Steel Roofing Sheets
CURRENT INVENTORY

Description
Date

Transaction Mode

Contractor

Jan-07-2018
Jan-23-2018
Jan-24-2018
Feb-11-2018

Purchases
Return Purchases
Sales
Returns on Sales

AA Supplies
AA Supplies

Feb-13-2018
Feb-21-2018
Feb-24-2018
Mar-16-2018
Mar-20-2018
Mar-31-2018

Purchases
Sales
Stolen Inventory
Sales

CT Papers

CT Papers

2ND
INSTANCE

Steel Nails
CURRENT INVENTORY

Description
Date
Apr-01-2018
Apr-05-2018

Transaction Mode
Purchase
Stock Used in Manufacture

Contractor
Fabric Wholesalers

Sheets

CURRENT INVENTORY VALUE

220.00

Purchased

\$8,364.95

490.00

Purchases & Returns

cription
Client

Any Other

Invoice Number

Quantity

111110
11111a

200
10

11111b

150

11111c

130

Myomin
Myomin
Sunndy
Reception
Blue
Inventory Reduction

ls

CURRENT INVENTORY VALUE

12.66

Purchased

\$1,379.94

15.00

Purchases & Returns

cription
Client

Misc.

Invoice Number
555555a

Making of Mesh

Quantity
15

Average Cost

Total Value

\$38.02

\$18,346.70

Sold
990.00

rchases & Returns
Item Cost
\$30.70
\$35.60

\$34.90

\$50.89

Total Cost

Invoice
Number

\$6,140.00
\$356.00
\$0.00
\$0.00

\$109.00

\$1,635.00

Quantity

1212a
1212b

\$5,235.00
\$0.00
\$0.00
\$0.00
\$6,615.70
\$0.00

Total Value

\$57.60

\$52,359.10

Item Cost

900
(190)

\$50.00
\$50.00

1212c
Journal
1212d

100
10
140

\$56.00
\$78.90
\$65.00

Journal

30

\$45.67

Sold
2.34

rchases & Returns

\$109.00

Total Value

Sales & Returns

Average Cost

Item Cost

Average Price

Total Sales
\$0.00
\$0.00
\$45,000.00
(\$9,500.00)
\$0.00
\$5,600.00
\$789.00
\$9,100.00
\$0.00
\$1,370.10

Average Price

Total Value

\$10.00

\$23.40

Sales & Returns
Total Cost

Invoice
Number

\$1,635.00
\$0.00 Journal
\$0.00

Quantity

2.34

Item Cost

\$10.00

Quantity in
Stock

Total Sales
\$0.00
\$23.40
\$0.00

Quantity in
Stock

IDENTITY
NOTATION
100

Quantity in
Stock
200.00
210.00
(690.00)
(500.00)
(350.00)
(450.00)
(460.00)
(600.00)
(470.00)
(500.00)

ID NO.
101

Quantity in
Stock
15.00
12.66
12.66

VENDORS / SUPPLIERS
NAME

Example Contractor 1

1233, Styb Street, Florida

EMAIL

PHONE NO.

OTHER

rtttafgh@yahoo.com

123456789

345677

OTHER
456788

CUSTOMERS
NAME

Example Customer 1

1 Any Street, Big Town, Zip code

EMAIL

PHONE NO.

OTHER

OTHER

STOCK DETAILS

If you buy the very same commodity from many sellers, pu

ITEM
Notation

Inventory NAME

Item #1

Example Stock Item 1

Item #2
Item #3
Item #4
Item #5
Item #6
Item #7
Item #8
Item #9
Item #10
Item #11
Item #12
Item #13
Item #14
Item #15
Item #16
Item #17
Item #18
Item #19
Item #20
Item #21
Item #22
Item #23
Item #24
Item #25
Item #26
Item #27
Item #28
Item #29
Item #30
Item #31
Item #32
Item #33
Item #34

Identity

Contractor Name
Example Vendor 1

Item #35
Item #36
Item #37
Item #38
Item #39
Item #40
Item #41
Item #42
Item #43
Item #44
Item #45
Item #46
Item #47
Item #48
Item #49
Item #50
Item #51
Item #52
Item #53
Item #54
Item #55
Item #56
Item #57
Item #58
Item #59
Item #60
Item #61
Item #62
Item #63
Item #64
Item #65
Item #66
Item #67
Item #68
Item #69
Item #70
Item #71
Item #72
Item #73

Item #74
Item #75
Item #76
Item #77
Item #78
Item #79
Item #80
Item #81
Item #82
Item #83
Item #84
Item #85
Item #86
Item #87
Item #88
Item #89
Item #90
Item #91
Item #92
Item #93
Item #94
Item #95
Item #96
Item #97
Item #98
Item #99
Item #100

ommodity from many sellers, put another one in line E, the subsequent in line F, and so forth.

Contarctor Name
Example Vendor 1

Misc.

Misc.

Misc.

Misc.

INVENTORY REPORT
Total Qty
Purchases

Total Cost
Value

0.00

\$0.00

0.00

Purchases & Returns

Description
Inventory Identity

Total Qty
Sales

Quantity

Purchase Cost

Total Stock
on Hand

Total Sales Value
\$0.00

0.00

Quantity

Sales Price

\$0.00

Inventory

Sales & Returns

Average Cost

Total Value of Stock
on Hand

Average Price

Inventory

Average Inventory

Example Stock Item 1

0.00

\$0.00

\$0.00

0.00

\$0.00

\$0.00

0.00

\$0.00

0

0.00

\$0.00

\$0.00

0.00

\$0.00

\$0.00

0.00

\$0.00

0

0.00

\$0.00

\$0.00

0.00

\$0.00

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0.00

\$0.00

0

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\$0.00

\$0.00

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\$0.00

\$0.00

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\$0.00

0

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\$0.00

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0

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\$0.00

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0
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0.00
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\$0.00
\$0.00

\$0.00
\$0.00

0.00
0.00

\$0.00
\$0.00

MONTHLY INVENTORY BALANCE
2018

2019

2020

2021

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER

Totals

0.00

0.00

0.00

0.00

Enter the Cumulative Value of The stock on Hand from
cell J6 on the 'Inventory Report' into the cells on the left
at the end of every month upon obtaining the stock
levels updated for the period so that you can have an
instant, unalterable insight of the significance of the
inventory on hand within each fortnight and use it to
begin preparing journal articles for Intermittent

Item #1

Example Stock Item 1
Description

Date

Transaction Method

Contractor

Quantity at Hand

Value at Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Client

Misc.

Invoice Number

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Item Cost

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice
Number

Quantity

Item Cost

Total Sales

\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00

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Identity Notation
0

Inventory
Quantity
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0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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0.00
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0.00

0

Item #2

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00

\$0.00
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\$0.00
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\$0.00

ID NO.
0

Quantity in
Stock
0.00
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0.00

0

Item #3

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
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\$0.00
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\$0.00

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ID NO.
0

Quantity in
Stock
0.00
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0.00

0

Item #4

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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\$0.00

ID NO.
0

Quantity in
Stock
0.00
0.00
0.00
0.00
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0.00
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0.00

0

Item #5

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
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\$0.00

ID NO.
0

Quantity in
Stock
0.00
0.00
0.00
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0

Item #6

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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ID NO.
0

Quantity in
Stock
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0.00

0

Item #7

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
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ID NO.
0

Quantity in
Stock
0.00
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0.00

0

Item #8

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
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ID NO.
0

Quantity in
Stock
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0

Item #9

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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\$0.00

ID NO.
0

Quantity in
Stock
0.00
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0.00

0

Item #10

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
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ID NO.
0

Quantity in
Stock
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0.00

0

Item #11

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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\$0.00

ID NO.
0

Quantity in
Stock
0.00
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0.00
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0.00

0.00

0

Item #12

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
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\$0.00

ID NO.
0

Quantity in
Stock
0.00
0.00
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0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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0

Item #13

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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ID NO.
0

Quantity in
Stock
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0

Item #14

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
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ID NO.
0

Quantity in
Stock
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0.00

0

Item #15

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
\$0.00
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ID NO.
0

Quantity in
Stock
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0

Item #16

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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ID NO.
0

Quantity in
Stock
0.00
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0.00

0

Item #17

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

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\$0.00

ID NO.
0

Quantity in
Stock
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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0.00
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0.00
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0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

0.00

0

Item #18

Description
Date

Transaction Type

Vendor | Supplier

Overall Quantity on Hand

Overall Value on Hand

0.00

\$0.00

Total Quantity
0.00

Purchases and Returns | Oth

scription
Customer

Other

Invoice #

Quantity

Average Cost
\$0.00

Total Value
\$0.00

ses and Returns | Other
Cost per Item

Total Quantity

Average Price

0.00

\$0.00

Total Value
\$0.00

Sales and Sales Returns | Other
Total Cost

Invoice #

Quantity

Price per Item

Total Sales

\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00
\$0.00

\$0.00
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\$0.00

\$0.00
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\$0.00
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\$0.00
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\$0.00
\$...

### Review

Anonymous
Really helpful material, saved me a great deal of time.

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