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1、12 InventoryManagement 12 2 LearningObjectives Definetheterminventory listthemajorreasonsforholdinginventories andlistthemainrequirementsforeffectiveinventorymanagement DiscussthenatureandimportanceofserviceinventoriesDiscussperiodicandperpetualreviewsystems Discusstheobjectivesofinventorymanagement
2、 DescribetheA B Capproachandexplainhowitisuseful 12 3 LearningObjectives DescribethebasicEOQmodelanditsassumptionsandsolvetypicalproblems Describetheeconomicproductionquantitymodelandsolvetypicalproblems Describethequantitydiscountmodelandsolvetypicalproblems Describereorderpointmodelsandsolvetypica
3、lproblems Describesituationsinwhichthesingle periodmodelwouldbeappropriate andsolvetypicalproblems 12 4 Inventory astockorstoreofgoods Inventory 12 5 InventoryModels Independentdemand finishedgoods itemsthatarereadytobesoldE g acomputerDependentdemand componentsoffinishedproductsE g partsthatmakeupt
4、hecomputer 12 6 TypesofInventories RawmaterialsandpurchasedpartsPartiallycompletedgoodscalledwork in processFinished goodsinventories manufacturingfirms ormerchandise retailstores 12 7 TypesofInventories Replacementparts tools andsuppliesGoods in transittowarehousesorcustomers 12 8 FunctionsofInvent
5、ory TomeetanticipateddemandTosmoothproductionrequirementsTodecoupleoperationsToprotectagainststockouts 12 9 FunctionsofInventory TotakeadvantageofordercyclesTohelphedgeagainstpriceincreasesTopermitoperationsTotakeadvantageofquantitydiscounts 12 10 ObjectiveofInventoryControl Toachievesatisfactorylev
6、elsofcustomerservicewhilekeepinginventorycostswithinreasonableboundsLevelofcustomerserviceCostsoforderingandcarryinginventory Inventoryturnoveristheratiooftheaveragecostofgoodssoldtotheaverageinventoryinvestment 12 11 AsystemtokeeptrackofinventoryAreliableforecastofdemandKnowledgeofleadtimesReasonab
7、leestimatesofHoldingcostsOrderingcostsShortagecostsAclassificationsystem EffectiveInventoryManagement 12 12 InventoryCountingSystems PeriodicSystemPhysicalcountofitemsmadeatperiodicintervalsPerpetualInventorySystemSystemthatkeepstrackofremovalsfrominventorycontinuously thusmonitoringcurrentlevelsofe
8、achitem 12 13 InventoryCountingSystems Two binsystem Twocontainersofinventory reorderwhenthefirstisemptyUniversalProductCode UPC Barcodeprintedonalabelthathasinformationabouttheitemtowhichitisattached 12 14 Leadtime timeintervalbetweenorderingandreceivingtheorderHolding carrying costs costtocarryani
9、temininventoryforalengthoftime usuallyayearOrderingcosts costsoforderingandreceivinginventoryShortagecosts costswhendemandexceedssupply KeyInventoryTerms 12 15 ABCClassificationSystem Classifyinginventoryaccordingtosomemeasureofimportanceandallocatingcontroleffortsaccordingly A veryimportantB modera
10、telyimportantC leastimportant Figure12 1 12 16 CycleCounting AphysicalcountofitemsininventoryCyclecountingmanagementHowmuchaccuracyisneeded Whenshouldcyclecountingbeperformed Whoshoulddoit 12 17 Economicorderquantity EOQ modelTheordersizethatminimizestotalannualcostEconomicproductionmodelQuantitydis
11、countmodel EconomicOrderQuantityModels 12 18 OnlyoneproductisinvolvedAnnualdemandrequirementsknownDemandiseventhroughouttheyearLeadtimedoesnotvaryEachorderisreceivedinasingledeliveryTherearenoquantitydiscounts AssumptionsofEOQModel 12 19 TheInventoryCycle Figure12 2 12 20 TotalCost Annualcarryingcos
12、t Annualorderingcost Totalcost TC 12 21 CostMinimizationGoal OrderQuantity Q TheTotal CostCurveisU Shaped OrderingCosts QO AnnualCost optimalorderquantity Figure12 4C 12 22 DerivingtheEOQ Usingcalculus wetakethederivativeofthetotalcostfunctionandsetthederivative slope equaltozeroandsolveforQ 12 23 M
13、inimumTotalCost Thetotalcostcurvereachesitsminimumwherethecarryingandorderingcostsareequal D Q S 12 24 ProductiondoneinbatchesorlotsCapacitytoproduceapartexceedsthepart susageordemandrateAssumptionsofEPQaresimilartoEOQexceptordersarereceivedincrementallyduringproduction EconomicProductionQuantity EP
14、Q 12 25 OnlyoneitemisinvolvedAnnualdemandisknownUsagerateisconstantUsageoccurscontinuallyProductionrateisconstantLeadtimedoesnotvaryNoquantitydiscounts EconomicProductionQuantityAssumptions 12 26 EconomicRunSize 12 27 TotalCostswithPurchasingCost 12 28 TotalCostswithPD Figure12 7 12 29 TotalCostwith
15、ConstantCarryingCosts Figure12 9 12 30 WhentoReorderwithEOQOrdering ReorderPoint Whenthequantityonhandofanitemdropstothisamount theitemisreorderedSafetyStock Stockthatisheldinexcessofexpecteddemandduetovariabledemandrateand orleadtimeServiceLevel Probabilitythatdemandwillnotexceedsupplyduringleadtim
16、e 12 31 DeterminantsoftheReorderPoint TherateofdemandTheleadtimeDemandand orleadtimevariabilityStockoutrisk safetystock 12 32 SafetyStock Figure12 12 12 33 ReorderPoint Figure12 13 12 34 OrdersareplacedatfixedtimeintervalsOrderquantityfornextinterval SuppliersmightencouragefixedintervalsMayrequireonlyperiodicchecksofinventorylevelsRiskofstockoutFillrate thepercentageofdemandfilledbythestockonhand Fixed Order IntervalModel 12 35 TightcontrolofinventoryitemsItemsfromsamesuppliermayyieldsavingsin O