Chapter 3: Tera Calculation 1 - Shipping Data Analysis[cite: 8]
Section 1: EIQ Matrix Calculation[cite: 8]
We will explain the "EIQ Matrix Calculation (Analytical Aggregation)", which is the core of shipping data analysis.[cite: 8]
1. Differences Between Conventional Calculation and EIQ Matrix Calculation[cite: 8]
There is a decisive difference between conventional logistics analysis (such as ABC analysis) and the EIQ matrix analysis proposed by Tera Calculation.[cite: 8]
- Conventional Calculation (ABC Analysis): Because item aggregation and destination aggregation are performed separately, the relationship between the two is unknown.[cite: 8] It is impossible to grasp "which rank of products is flowing to which rank of destinations."[cite: 8]
- EIQ Matrix Calculation (Tera Calculation): It aggregates data by linking "Item Rank (5 categories) × Destination Rank (5 categories) = 25 blocks."[cite: 8] This makes it possible to accurately grasp the volume flowing from a specific item rank (equipment) to a specific destination rank (shipping area).[cite: 8]
2. What Can Be Read from the EIQ Matrix Table[cite: 8]
By utilizing this table, specific specification studies for the distribution center become easier.[cite: 8]
- Grasping Workload: Picking frequency, total piece count, volume, weight, etc., can be checked by rank.[cite: 8]
- Optimizing Equipment: The number of items requiring flow racks and the number of cases/pallets needed for replenishment can be calculated on a block-by-block basis.[cite: 8]
- Flexibility of Conversion Units: All figures are converted from piece counts, and the display unit can be switched between cases, PL, volume, weight, etc.[cite: 8]
3. How to Read Rank Symbols[cite: 8]
To prevent confusion, rules have been established so the aggregation target can be identified at a glance.[cite: 8]
Example: "C-Ca-E_A1" (Originally "CケE_A1")[cite: 8]
- 1st Character: "C" Case Shipping / "B" Piece Shipping[cite: 8]
- 2nd Character: "Ca" Case Conversion (the item used for ranking)[cite: 8]
- 3rd Character: "E" Destination Rank / "I" Item Rank[cite: 8]
- 4th Character: "A1" Specific Rank Name[cite: 8]
→ In other words, it indicates Destination Rank A1 for Case Shipping.[cite: 8]
4. Analysis Operation Procedure[cite: 8]
On the Tera Calculation 1 screen, analysis is processed using the following procedure.[cite: 8]
- Selecting Characteristics: Select the target day from characteristics such as a specified shipping date or "Maximum Case Shipping Day."[cite: 8]
- Specifying Category and Unit: Select Case/Piece, Actual Number/Ratio, and Display Unit (Piece, Volume, etc.).[cite: 8]
- Condition Extraction: Narrow down target data using checkboxes for Item Category, Shipping Category, etc.[cite: 8]
- Execution: Click the Start button to output the results to the data grid view (table).[cite: 8]
Observations and Points to Note[cite: 8]
- Visualization: Since large-scale data (over 400 destinations, over 4000 items) cannot be fully read with a standard EIQ table, grouping via a matrix table or an EIQ Scatter Plot (visual grasp of dispersion) is highly effective.[cite: 8]
- Appending Records: When snipping the table for documentation, be sure to note the "Shipping Method," "Shipping Date," and "Display Unit" alongside it to avoid later confusion.[cite: 8]
Item 1: Differences Between Conventional Calculation and EIQ Matrix Calculation[cite: 8]
In Tera Calculation, calculations aggregated using the ABC analysis method are called conventional calculations.[cite: 8] While ABC analysis divides ranks into 3 categories and aggregates items and destinations separately, Tera Calculation divides ranks into 5 categories for its item and destination aggregation.[cite: 8]
In conventional calculation, the totals for each item in the item aggregation and destination aggregation are the same, but there is no relationship between the two tables.[cite: 8] Therefore, with conventional calculation, it is impossible to know which destination rank the A1 rank items are distributed to.[cite: 8] When considering the scale and operational methods of a distribution center or calculating the volume for each process, data linking destinations and items is required.[cite: 8]
Tera Calculation proposes a method of linking item ranks and destination ranks, dividing them into "Item Rank 5 * Destination Rank 5 = 25 blocks" for aggregation.[cite: 8] In Tera Calculation, this aggregation table is called the EIQ Matrix Table.[cite: 8] Furthermore, Tera Calculation can display row count (retrieval frequency), piece count, case conversion, PL conversion, volume conversion, and weight conversion at the same rank boundaries.[cite: 8]
With this EIQ Matrix Table, one can easily read, for example: how many times A1 rank items in the shipping area flow racks are picked, what the total piece count is, what the volume is at that time, how many shipping containers are needed, how many cases are required for replenishment from the storage area to the flow racks, and how many pallets it will be when transported as a mixed PL from the storage area.[cite: 8]
The display units of the EIQ Matrix Table indicate: "Piece" means piece count, "Case" means case conversion, "PL" means PL conversion, "Volume" means volume conversion, and "Weight" means weight conversion.[cite: 8] Please note that from now on, all volume units other than piece count are conversion units converted from the piece count (if the expression "Case" is used, it means case conversion).[cite: 8]
As mentioned above, the EIQ Matrix Table is an aggregation table divided into 5 * 5 = 25 blocks.[cite: 8] The horizontal total is the aggregation of destination volume, and the vertical total is the aggregation of item volume.[cite: 8] If the EIQ Matrix Table display unit is changed to PL conversion, the horizontal total will match the PL conversion of the conventional item aggregation, and the vertical total will match the PL conversion of the conventional destination aggregation.[cite: 8] Matrix aggregation and conventional calculation are linked and always display the same contents.[cite: 8] The same applies to the number of destinations and the number of items.[cite: 8]
Differences Between the EIQ Table and EIQ Matrix Table[cite: 8]
Originally, it makes the most sense to design a system by looking at the volume of which items go to which destinations, and Mr. Shin Suzuki introduced this as the EIQ Table.[cite: 8] Indeed, if there are about 50 destinations and 100 items, it is possible to create and examine an EIQ Table.[cite: 8] However, like the shipping data this time, an EIQ Table with over 400 destinations and over 4000 items would become a table that cannot fit even in an 8-mat room, making it impossible to read through completely.[cite: 8]
Therefore, Tera Calculation devised an aggregation that groups the EIQ Table by rank, and decided to call this the EIQ Matrix Table.[cite: 8]
There is also a method to display the EIQ Table as points in a scatter plot.[cite: 8] 400 destinations and 4000 items are visualized, and by scrolling horizontally on a PC screen, one can visually see the dispersion of the EIQ Table.[cite: 8] In Tera Calculation, we decided to call this chart the EIQ Scatter Plot (refer to Tera Calculation 4_Reference EIQ).[cite: 8]
Next, we introduce the EIQ Graph devised by Mr. Shin Suzuki.[cite: 8] This graph represents a day's volume in a single chart, showing cumulative destination volume and cumulative item volume as curves, and destination retrieval frequency and item retrieval frequency as bar graphs (refer to Tera Calculation 4_Reference EIQ).[cite: 8]
Please confirm the details of the EIQ Table and EIQ Graph in other publications.[cite: 8]
Item 2: Relationship Between Conventional Calculation and EIQ Matrix Calculation[cite: 8]
Conventional calculation aggregates destinations and items separately, so the relationship between destination aggregation and item aggregation is unknown.[cite: 8]
EIQ Matrix Aggregation reveals the volume of A1 rank items destined for A1 rank destinations, displaying volume aggregated with a linked relationship between destinations and items.[cite: 8]
Observation: With this EIQ Matrix Table, it is possible to grasp how much volume flows from each item rank (equipment) to each destination rank (shipping area).[cite: 8]
The EIQ Matrix Table can specify extraction conditions and display data that matches those conditions.[cite: 8]
Looking at the aggregation table can often be confusing due to terms like Case Shipping Item A1 Rank, Case Shipping Destination A1 Rank, Piece Shipping Item A1 Rank, and Piece Shipping Destination A1 Rank.[cite: 8] To eliminate this confusion, it is designed so the contents of the table can be identified when looking at the rank symbol.[cite: 8]
The meaning of the rank symbol "C-Ke-E_A1": The 1st character is "C" for case shipping and "B" for piece shipping.[cite: 8] The 2nd character is the data item used for ranking: "Row" for row count (shipping frequency), "Pi" for piece count, "Ca" for case conversion, "PL" for pallet conversion, "Vo" for volume conversion, and "We" for weight conversion.[cite: 8]
The 3rd character is "E" for destination rank and "I" for item rank.[cite: 8] The 4th character is "A1" for A1 rank, "A2" for A2 rank, "B" for B rank, "C" for C rank, and "D" for D rank.[cite: 8] Therefore, the rank symbol "C-Ca-E_A1" represents case shipping, rank calculation based on case conversion, and A1 rank for the destination rank.[cite: 8]
Observation: When clipping the EIQ Matrix Table and pasting it into another document, be sure to write the "Shipping Method (Case Shipping)", "Shipping Date (2022/05/09)", and "Display Unit (Case)" at the top of the clipped table; otherwise, it will become unclear what is being aggregated.[cite: 8]
Item 5: Data Analysis Aggregation[cite: 8]
The first screen of Tera Calculation 1.[cite: 8]
(A1) Clicking the shipping date radio button aggregates by specifying the shipping date; clicking the characteristic radio button allows selection of characteristics like max row count day, max case shipping day, and max piece shipping day.[cite: 8]
(A2) Choose either case shipping or piece shipping with the radio button.[cite: 8]
(A3) Choose one display unit from 6 types such as shipping frequency or pieces from the radio buttons.[cite: 8]
(A4) Choose actual number or percentage ratio with the radio button.[cite: 8] After selecting (A1)-(A4), click the start button (A5) to begin processing.[cite: 8]
(A6) The processing status is displayed in the text box.[cite: 8]
After calculation processing, it displays the output case/piece shipping category in (B1), the shipping date in (B2), the number of destinations in (B3), the number of items in (B4), and outputs the EIQ Matrix Table to the data grid view (table) in (B5).[cite: 8]
The matrix table can display actual numbers and percentage ratios.[cite: 8] Ratio A% displays each rank's ratio setting the total after extraction (actual number total) as 100%, and Ratio B% sets the total of the entire shipping day as 100%.[cite: 8]
(C1) Uses checkboxes to select targets from the four shipping condition items of the shipping data (multiple selections allowed).[cite: 8] Data (shipping data records) for items without checkboxes checked are excluded, and the EIQ Matrix Table calculation is performed.[cite: 8]
(C3) EXCEL Output exports the EIQ Matrix Table to Excel.[cite: 8]
Section 2: Equipment Allocation[cite: 8]
We will explain "Logistics Equipment Allocation and Material Flow Confirmation", which is the step following shipping data analysis.[cite: 8]
This is the process of calculating the required area and processing capacity of facilities by allocating specific logistics equipment to the volume of each block derived by the EIQ matrix calculation.[cite: 8]
1. Procedure for Allocating Logistics Equipment[cite: 8]
On the Tera Calculation 1 screen, set the optimal equipment according to the item rank (liquidity).[cite: 8]
- Specifying Equipment: From the selection field on the screen, specify equipment such as automated warehouses (PL_AS/RS), electric racks, fixed racks, and sorting machines.[cite: 8]
- Allocation to Cells: By clicking the cell corresponding to each item rank in the EIQ Matrix Table, the equipment is linked.[cite: 8]
- Initial Settings: Standard equipment is already allocated at startup according to the "Tera Settings," so make changes as necessary.[cite: 8]
2. Visual Confirmation via Material Flow Diagram[cite: 8]
From receiving to inventory and shipping, you can check in a list which equipment handles how much volume.[cite: 8]
- Receiving and Storage:[cite: 8]
- PL Single-Item Receiving: Items received in pallet units are stored as-is in the empty racks of the equipment.[cite: 8]
- Case Receiving: Items received in case units are presumed to result in "mixed storage," where multiple items are loaded onto a pallet.[cite: 8]
- Display of Inventory Data: Displays figures such as item count, piece count, case conversion, and PL conversion.[cite: 8] Pallet configurations can also be classified and displayed from single-item loads to a maximum of 8 mixed loads.[cite: 8]
- Movement to the Shipping Operations Area: Displays which operation equipment (flow racks, medium-duty racks, sorting machines, etc.) the products retrieved from inventory equipment pass through before shipping.[cite: 8] The display unit switches in real-time synchronized with the selection in the "Shipping Volume" column (PL, Case, etc.).[cite: 8]
3. How to Read the Table (Example)[cite: 8]
Specific aggregation results are read as follows.[cite: 8]
Example: "A total of 89 PLs were retrieved from PL_AS/RS; 60 PLs were transported to the sorting machine, and 29 PLs to the manual sorting area."[cite: 8]
In this way, you can clearly grasp the volume balance from the upstream storage equipment to the downstream work processes.[cite: 8]
Item 1: Allocation of Logistics Equipment[cite: 8]
By allocating logistics equipment to the EIQ Matrix Table, you can calculate the necessary area and required processing capacity of the logistics equipment.[cite: 8]
1. Specify the equipment in the Logistics Equipment Selection Field (left figure).[cite: 8]
2. By clicking the cells in the table below, equipment is allocated to each item rank.[cite: 8]
(Since it is already allocated by Tera Settings at the start, this becomes a modification task.)[cite: 8]
The table is read as: A total of 89 PLs were retrieved from PL_ASS; 60 PLs were transported to the sorting machine, and 29 PLs were transported to manual sorting.[cite: 8]
Item 2: Confirmation with Flow Diagram[cite: 8]
Displays a list of volumes from receiving to inventory and ultimately shipping.[cite: 8]
Select case unit shipping or piece unit shipping.[cite: 8] Displays which logistics equipment the received goods are stored in.[cite: 8] Displays item count and storage units (PL units, case units).[cite: 8] It also enables display in volume conversion.[cite: 8]
Displays the number of items and piece count stored in inventory equipment, as well as conversion values like case conversion and PL conversion of the piece count.[cite: 8] Displays the stored PL configuration from single-item load up to 8 mixed loads.[cite: 8]
Displays whether the stocked products are shipped via the shipping operations area logistics equipment, noting the destination count, item count, retrieval frequency, and piece count.[cite: 8] Displays conversions of the piece count.[cite: 8]
When the received product is a PL single-item load (1 item loaded on a pallet), it can be imagined that it is stored in PL units in empty racks of the equipment, and when the received product is in cases, it is stored in mixed loads (multiple items loaded on a pallet).[cite: 8]
The volume heading to the shipping operations area equipment changes its notation unit in synchronization with the selection in the "Shipping Volume" column in the above diagram.[cite: 8]
Section 3: Relationship Between Shipping Data and Receiving/Inventory[cite: 8]
We will explain the basic concept and calculation logic for deriving inventory volume and receiving volume from shipping data.[cite: 8]
1. Basic Relationship of Shipping, Receiving, and Inventory[cite: 8]
The flow of goods in a logistics center is represented by the following formula.[cite: 8]
Cumulative Receiving - Cumulative Shipping = Inventory[cite: 8]
- Characteristics of Shipping: Because it is based on customer orders, the center side cannot control the volume or delivery deadlines.[cite: 8]
- Characteristics of Receiving: It is an operation to secure inventory, and the center side can instruct suppliers on quantities and delivery dates/times.[cite: 8]
- Purpose of Inventory: To secure enough volume to prevent stockouts against daily fluctuating shipping volumes, while compressing it as much as possible for cost reduction.[cite: 8]
2. Logic for Estimating Inventory Count (Storage Quantity)[cite: 8]
In Tera Calculation, the inventory volume during stable operations is calculated using the following formula.[cite: 8]
$$\text{Stable Operation Inventory} = \text{Safety Stock} + \frac{\text{Fluctuating Inventory}}{2}$$
* Fluctuating Inventory = Maximum Inventory - Safety Stock[cite: 8]
- Daily Shipping Volume: Uses the average value of all shipping data.[cite: 8]
- Concept of Inventory Days: Managed based on "Average Shipping Volume × Number of Days."[cite: 8]
- Application to Actual Practice: Since this calculated value is the theoretical average storage volume, if a practical margin is needed, a "margin rate" is added after calculation for adjustment.[cite: 8]
- Supplement: The "reorder point" is not considered when calculating inventory volume.[cite: 8] The reorder point is merely an indicator for ordering timing that guarantees inventory volume during the period until receiving.[cite: 8]
3. Handling "Dead Stock" Not Appearing in Shipping Data[cite: 8]
Not all inventory items move within the period of the analyzed shipping data.[cite: 8] Especially for low-liquidity items, shipping records may be zero.[cite: 8]
- Addition to Rank: In Tera Calculation, inventory items not present in the shipping data (no allocations) are added to the D Rank of Piece Shipping during inventory and receiving calculations.[cite: 8]
- Limitation of Target: This addition process is performed only for piece shipping items and is not applied to case shipping items.[cite: 8]
With the steps so far, preparations are complete to estimate the total volume of the entire center based on the shipping data, including not only "moving volume" but also "sleeping inventory."[cite: 8]
Item 1: Shipping, Receiving, and Inventory[cite: 8]
Receiving, shipping, and inventory can be expressed by the relationship "Cumulative Receiving - Cumulative Shipping = Inventory."[cite: 8]
Since shipping represents orders from customers, the distribution center cannot arbitrarily increase/decrease shipping volume or change delivery dates based on its own convenience.[cite: 8] Inventory must secure an amount that prevents stockouts against daily fluctuating shipping volumes.[cite: 8] On the other hand, due to inventory cost reduction and scale constraints of the distribution center, it is desirable to keep the inventory volume as low as possible.[cite: 8]
Inventory is managed for each item using the calculation: Average Shipping Volume * Number of Days = Maximum Inventory Volume.[cite: 8]
Receiving is a task where the center orders from suppliers and has them deliver to the distribution center to secure inventory.[cite: 8] The distribution center can dictate quantities and delivery dates/times (is this really true?).[cite: 8] For the methodology to calculate receiving and inventory from shipping data, refer to the estimation of inventory volume and receiving volume in Tera Calculation.[cite: 8]
Item 2: Inventory Goods Not Recorded in Shipping Data (Not Shipped)[cite: 8]
There are inventory items not included in the entirety of the shipping data (multiple shipping days).[cite: 8]
High-liquidity items are included in the shipping data, but low-liquidity items might not be.[cite: 8]
Tera Calculation adds these items without allocations in the entire shipping data to the D rank during inventory and receiving calculations.[cite: 8]
Note: They are added to the D rank for piece shipping items, and are not added to case shipping.[cite: 8]
Item 3: Calculation of Inventory Count (Storage Quantity)[cite: 8]
There are inventory items not included in the entirety of the shipping data (multiple shipping days).[cite: 8]
Inventory can be expressed by the relationship "Cumulative Receiving - Cumulative Shipping = Inventory."[cite: 8] Since shipping represents orders from customers, the distribution center cannot increase/decrease shipping volume or change delivery dates based on its own convenience.[cite: 8] Inventory must secure an amount that prevents stockouts against daily fluctuating shipping volumes.[cite: 8]
On the other hand, due to inventory cost reduction and scale constraints of the distribution center, it is desirable to keep inventory volume as small as possible.[cite: 8] Inventory is managed for each item by the calculation: Average Shipping Volume * Number of Days = Maximum Inventory Volume.[cite: 8]
Receiving is a task where the center orders from suppliers and has them deliver to the distribution center to secure inventory.[cite: 8] While shipping dates and volumes cannot be changed, receiving quantities and delivery dates/times can be instructed by the distribution center.[cite: 8] Under the above premises, Tera Calculation performs inventory volume estimation and receiving volume estimation from the shipping data.[cite: 8]
For shipping volume/day, the average value of all data is used.[cite: 8]
The method Tera Calculation uses to determine inventory storage volume is: Stable Operation Inventory (Storage Volume) = Safety Stock + (Fluctuating Inventory / 2), where Fluctuating Inventory = Maximum Inventory - Safety Stock.[cite: 8]
For example, suppose there are 18 items with a maximum inventory of 11 days, safety stock of 2 days, and fluctuating inventory of 9 days.[cite: 8] If these 18 items are received 3 items at a time every day, the storage volume of the fluctuating inventory becomes = (Fluctuating Inventory / 2).[cite: 8]
If calculating the stable operation inventory (storage volume) seems impossible in practice, simply add a margin rate after the above calculation.[cite: 8]
Note: The reorder point is irrelevant to inventory volume calculations; the reorder point is the inventory volume required to trigger a purchasing order at a timing that guarantees inventory levels during the period from ordering to receiving.[cite: 8]
Section 4: Inventory and Receiving Calculation[cite: 8]
We will explain the basic concept and calculation logic for deriving inventory volume and receiving volume from shipping data.[cite: 8]
1. Basic Relationship of Shipping, Receiving, and Inventory[cite: 8]
The flow of goods in a logistics center is represented by the following formula.[cite: 8]
Cumulative Receiving - Cumulative Shipping = Inventory[cite: 8]
- Characteristics of Shipping: Because it is based on customer orders, the center side cannot control the volume or delivery deadlines.[cite: 8]
- Characteristics of Receiving: It is an operation to secure inventory, and the center side can instruct suppliers on quantities and delivery dates/times.[cite: 8]
- Purpose of Inventory: To secure enough volume to prevent stockouts against daily fluctuating shipping volumes, while compressing it as much as possible for cost reduction.[cite: 8]
2. Logic for Estimating Inventory Count (Storage Quantity)[cite: 8]
In Tera Calculation, the inventory volume during stable operations is calculated using the following formula.[cite: 8]
$$\text{Stable Operation Inventory} = \text{Safety Stock} + \frac{\text{Fluctuating Inventory}}{2}$$
* Fluctuating Inventory = Maximum Inventory - Safety Stock[cite: 8]
- Daily Shipping Volume: Uses the average value of all shipping data.[cite: 8]
- Concept of Inventory Days: Managed based on "Average Shipping Volume × Number of Days."[cite: 8]
- Application to Actual Practice: Since this calculated value is the theoretical average storage volume, if a practical margin is needed, a "margin rate" is added after calculation for adjustment.[cite: 8]
- Supplement: The "reorder point" is not considered when calculating inventory volume.[cite: 8] The reorder point is merely an indicator for ordering timing that guarantees inventory volume during the period until receiving.[cite: 8]
3. Handling "Dead Stock" Not Appearing in Shipping Data[cite: 8]
Not all inventory items move within the period of the analyzed shipping data.[cite: 8] Especially for low-liquidity items, shipping records may be zero.[cite: 8]
- Addition to Rank: In Tera Calculation, inventory items not present in the shipping data (no allocations) are added to the D Rank of Piece Shipping during inventory and receiving calculations.[cite: 8]
- Limitation of Target: This addition process is performed only for piece shipping items and is not applied to case shipping items.[cite: 8]
With the steps so far, preparations are complete to estimate the total volume of the entire center based on the shipping data, including not only "moving volume" but also "sleeping inventory."[cite: 8]
Item 1: Inventory Receiving Calculation Screen[cite: 8]
1. Input the maximum inventory days and safety stock days by rank.[cite: 8]
2. Input the number of inventory items not present in the shipping data.[cite: 8]
3. Calculate and output the average daily shipping volume, which serves as the basis for the calculation.[cite: 8]
4. Calculate the stable operation inventory days.[cite: 8] Stable Operation Inventory (Storage Volume) = Safety Stock + (Fluctuating Inventory / 2), where Fluctuating Inventory = Maximum Inventory - Safety Stock (refer to Section 2).[cite: 8]
5. Calculate the inventory volume during stable operations.[cite: 8] Inventory volume = Average daily shipping volume * Stable operation inventory days.[cite: 8]
6. Calculate the inventory volume per item.[cite: 8] Inventory volume per item = Inventory volume / Number of items.[cite: 8]
7. Determination of required pallet conversion count, and single-item/mixed loads.[cite: 8]
8. Calculation of receiving item count and volume.[cite: 8] Receiving Item Count = Inventory Item Count / Receiving Cycle; Receiving Volume = Shipping Volume; Receiving Volume Calculation (for checking).[cite: 8]
Pressing the Inventory Volume radio button displays inventory volume, and pressing the Receiving Volume radio button displays receiving volume.[cite: 8]
9. Pressing the Excel button saves the inventory and receiving data to Excel.[cite: 8]
The above uses piece shipping as an example, but case shipping performs the same calculation.[cite: 8] Note: Inventory not included in shipping is added to piece shipping, and case shipping sets inventory not present in shipping data to 0.[cite: 8]
Observations[cite: 8]
"Inventory = Cumulative Receiving - Cumulative Shipping" was mentioned earlier, and while the key is to manage receiving volumes while observing shipping trends on an item-by-item basis, there are factors making it impossible to restrict receiving volumes, such as production lots, price fluctuations based on purchase quantities, and advance purchasing due to sales strategies.[cite: 8]
From a company-wide perspective, reducing distribution center inventory is not always the highest priority; the receiving volume is determined by coordination between the sales and purchasing departments, meaning the company's overall management capability is directly reflected in its inventory.[cite: 8]