Transcript Inventory Management - Florida Gulf Coast University

Inventory Management
Replenishment
order
Factory
Production
Delay
Replenishment Replenishment
order
order
Wholesaler
Distributor
Shipping
Delay
Wholesaler
Inventory
Retailer
Shipping
Delay
Distributor
Inventory
Customer
order
Customer
Item Withdrawn
Retailer
Inventory
Role of Inventory in Services
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Decoupling inventories
Seasonal inventories
Speculative inventories
Cyclical inventories
In-transit inventories
Safety stocks
Considerations in Inventory Systems
• Type of customer demand
• Planning time horizon
• Replenishment lead time
• Constraints
Relevant Inventory Costs
• Ordering costs
• Receiving and inspections costs
• Holding or carrying costs
• Shortage costs
Inventory Management Questions
• What should be the order quantity
(Q)?
• When should an order be placed,
called a reorder point (ROP)?
• How much safety stock (SS) should
be maintained?
Inventory Models
• Economic Order Quantity (EOQ)
• Special Inventory Models
With Quantity Discounts
Planned Shortages
• Demand Uncertainty - Safety Stocks
• Inventory Control Systems
Continuous-Review (Q,r)
Periodic-Review (order-up-to)
• Single Period Inventory Model
Units on Hand
Inventory Levels For EOQ Model
Q
0
Q
D
Time
Annual Costs For EOQ Model
900
700
600
Holding Cost
Ordering Cost
Total Cost
500
400
300
200
100
Order Quantity, Q
140
120
100
80
60
40
20
0
0
Annual Cost, $
800
EOQ Formula
• Notation
D = demand in units per year
H = holding cost in dollars/unit/year
S = cost of placing an order in dollars
Q = order quantity in units
• Total Annual Cost for Purchase Lots
TCp  S ( D / Q)  H (Q / 2)
• EOQ
2 DS
EOQ 
H
Annual Costs for Quantity
Discount Model
22,000
C = $20.00
C = $19.50
C = $18.75
21000
20000
2000
1000
0
100
200
300
400
Order quantity, Q
500
600
700
Inventory Levels For Planned
Shortages Model
Q-K
Q
TIME
0
-K
T1
T2
T
Formulas for Special Models
• Quantity Discount Total Cost Model
TCqd  CD  S ( D / Q)  I (CQ / 2)
•
Percentage of inventory items (SKUs)
100
90
80
70
60
C
50
30
B
20
10
A
40
100
90
80
70
60
50
40
30
20
10
0
0
Percentage of dollar volum e
ABC Classification of Inventory
Items
Inventory Items Listed in
Descending Order of Dollar Volume
Unit cost
($)
Monthly
Sales
(units)
Dollar
Volume ($)
Computers
Entertainment center
3000
2500
50
30
150,000
75,000
Television sets
Refrigerators
Monitors
400
1000
200
60
15
50
Stereos
Cameras
Software
Computer disks
CDs
150
200
50
5
20
60
40
100
1000
200
Inventory Item
Totals
Percent of
Dollar
Volume
Percent of
SKUs
Class
74
20
A
24,000
15,000
10,000
16
30
B
9,000
8,000
5,000
5,000
4,000
10
50
C
100
100
305,000