Acquisition Cost

Certified Inventory Optimization Professional (CIOP) is an end-to-end supply chain certification program. The certification consists of 30 modules focusing both on traditional and futuristic topics. The traditional topics are introduction to supply chain management, all about inventory, strategic business planning, forecasting, demand management, capacity management, sales and operations planning (S&OP), master scheduling (MPS), materials requirements planning (MRP) and production activity control (PAC). It also includes topics on procurement, warehousing, transportation, distribution, and packaging. The topic on the future trends such as Blockchain, Internet of Things (IoT), Robotic Process Automation (RPA), Machine Learning (M/L) and Artificial Intelligence (AI). There is a significant focus on supporting technologies such as forecasting and process mapping tools such as Microsoft Visio. In addition to the above indicated topics the participants need to master over 3000 terminologies in supply chain management.

An acquisition cost, also known as the value of the acquisition, is the amount that a firm estimates in its books for certain land or equipment immediately after deducting for overhead, rebates, special payments and other customary charges, but before selling. It is commonly used as a financial measure of an acquisition transaction. 

Because it involves an inventory of the capital assets of the firm, the acquisition cost can be defined as the amount spent by a firm for the acquisition of net worth, or the present value of an amount paid to a firm for the net worth of its capital stock. This figure is equal to the total current value of all the equity (owner equity plus common equity) of the firm. Acquisition cost is important to businesses because it reflects the portion of the net value of the firm which is non-operational.

An inventory cost, also called the cost of new production, is the first to charge that a buyer of goods pays to a manufacturer or agent to obtain the facility or property that will produce the firm's products. This cost includes the cost of materials, labor and overhead associated with producing the goods, and it is equal to the product price (purchase price) times the number of units manufactured. In inventory terms, a firm that has no existing manufacturing facility is called an entry-level firm, while one that has established factories in various locations is classified as a mid-range firm. The product quality of newly established plants is considered in determining inventory costs, while costs for older plants are considered in determining the cost effectiveness of the plant.

Many firms are unable to obtain the inventory they need at less than the market price, and may incur significant overheads in procuring the raw materials they need for their production process. In such cases, they seek assistance from warehousing firms. In warehousing, firms manage the transportation, receiving, storing, shipping, receiving, and production of the firms' raw materials. This warehousing function, although a relatively low level of activity, is essential to firms that have the need to maintain a strong cash flow. Warehousing firms can help a firm to maintain the cash flow necessary for meeting payrolls, providing profit growth, and lowering inventory levels.

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