Transcript Inventory Management Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 12 – 1

12
Inventory Management
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
12 – 1
ABC Analysis
Percentage of dollar value
100 —
Class C
Class B
90 —
Class A
80 —
70 —
60 —
50 —
40 —
30 —
20 —
10 —
0—
10
20
30
40
50
60
70
80
90 100
Percentage of SKUs
Figure 12.1 – Typical Chart Using ABC Analysis
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
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Annual cost (dollars)
Calculating EOQ
Total cost
Holding cost
Ordering cost
Lot Size (Q)
Figure 12.3 – Graphs of Annual Holding, Ordering, and Total Costs
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
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Selecting the Reorder Point
IP
IP
On-hand inventory
Order
received
Order
received
Q
Order
received
Q
OH
OH
IP
Order
received
Q
OH
R
Order
placed
Order
placed
L
TBO
Order
placed
L
TBO
L
Time
TBO
Figure 12.6 – Q System When Demand and Lead Time Are Constant and Certain
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Continuous Review Systems
IP
Order
received
On-hand inventory
Order
received
IP
IP
Order
received
Order
received
Q
Q
Q
R
Order
placed
Order
placed
Order
placed
0
L1
TBO1
L2
TBO2
L3
Time
TBO3
Figure 12.7 – Q System When Demand Is Uncertain
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Demand During Lead Time
σt = 15
σt = 15
+
75
Demand for week 1
+
75
Demand for week 2
σt = 15
=
75
Demand for week 3
σt = 25.98
225
Demand for 3-week lead time
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
Figure 12.8 – Development of Demand
Distribution for the Lead
Time
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Demand During Lead Time
Cycle-service level = 85%
Probability of stockout
(1.0 – 0.85 = 0.15)
Average
demand
during
lead time
R
zσdLT
Figure 12.9 – Finding Safety Stock with a Normal Probability Distribution for an
85 Percent Cycle-Service Level
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Periodic Review System (P)
On-hand inventory
T
IP
IP
Order
received
IP
Order
received
Q1
OH
Q2
Q3
Order
received
OH
IP1
IP3
Order
placed
Order
placed
IP2
L
L
P
L
Time
P
Protection interval
Figure 12.10 – P System When Demand Is Uncertain
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Computing Q and P Systems
Q system
= Lead time = L
P system:
Protection interval
=Time between orders + Lead time = P + L
where Time between orders = Review
interval P
Reorder point(R) = Average demand
Target inventory level (T) = Average demand
during the protection interval + Safety during the protection interval + Safety stock
stock
= d(P + L) + zσP+L
= dL + zσL
where Standard deviation of demand during
where Standard deviation of demand the protection interval = 
PL
P L   t
during the lead time =  L   t L
Order quantity
= EOQ
= Target inventory level–Inventory position
= T – IP
Replenishment rule Order EOQ units when IP  R.
Every P time periods order T – IP units.
Total system cost
Q
D
dP
D
C  ( H )  ( S )  Hz L
C
(H ) 
( S )  Hz P  L
2
Q
2
dP
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