Download presentation

Presentation is loading. Please wait.

Published byJeffrey Jeffres Modified over 3 years ago

1
OPSM 301 Operations Management Class 16: Inventory Management: safety inventory Koç University Zeynep Aksin zaksin@ku.edu.tr

2
Levers for Managing Inventories Theoretical Inventory I th =R x T th –Reduce critical activity times –Eliminate non-value added work –Move work from critical to non-critical –Redesign process to replace serial with parallel processing Cycle inventory –Average inventory per cycle=Q/2 –Reduce set-up to reduce cycle inventory

3
Levers for Managing Inventories Seasonal Inventory –Use pricing and incentive tactics to smooth demand –Increase resource flexibility Safety inventory-this is next!

4
Demand is uncertain We may use historical data to forecast demand Recall QMBU 301? Some truths about forecasts –They are always wrong-measure error of forecast –Aggregate forecasts are more accurate than individual forecasts –Long range forecasts are less accurate than short- range forecasts

5
5 Set Up: Simple Supply Chain Three key questions: –How often to review? –When to place an order? –How much to order? orders Pipeline stock Supply On-hand inventory Inventory position

6
How often to review Continuous review Periodic review

7
7 Inventory Lead time Place an order Receive order Çevrim Stoğu Emniyet Stoğu Q Q/2 Inventory on hand Pipeline stock Q Time

8
8 Why hold Safety Inventory? Demand uncertainty Supply uncertainty Measures of product availability –Product fill rate (f): fraction of demand that is satisfied from product in inventory –Cycle service level (CSL): fraction of replenishment cycles that end with all the customer demand being met

9
9 Reminder: The Normal Distribution Average = 30 Standard Deviation = 5 Standard Deviation = 10

10
Probabilistic Models When to Order? Reorder Point (ROP) Optimal Order Quantity X Safety Stock (SS) Time Inventory Level Lead Time SS ROP Service Level P(Stockout) Place order Receive order Frequency

11
Stochastic Model: Fixed-Order Quantity Order Quantity = same as before (EOQ) Safety stock

12
Reorder Point and Desired Stockout Probability Mean Demand During Lead Time Reorder Point (ROP) 1.0-(Desired Service Level) Reorder Point = Mean Demand During Lead Time + Safety Stock Desired Service Level

13
Transform X = N(mean,s.d.) to z = N(0,1) z = (X - mean) / s.d. F(z) = Prob( N(0,1) < z) Transform back, knowing z*: X* = mean + z*s.d. The Standard Normal Distribution F(z) z 0

14
Example If we want to have probability of not stocking out=95% (SL=95%) z=1.64 ROP =mean+1.64 Assume that for daily demand: Mean=20 std dev=10 Lead time=L=5 days Then:

Similar presentations

OK

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 1 Independent Demand Inventory Management Systems.

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 1 Independent Demand Inventory Management Systems.

© 2018 SlidePlayer.com Inc.

All rights reserved.

Ads by Google

Speech reading ppt on ipad Ppt on political parties and electoral process Ppt on first conditional sentences Ppt on area of triangle in coordinate geometry Ppt on human eye structure Free ppt on science and technology Ppt on pricing policy in economics One act play ppt on apple Ppt on power line communication modem Ppt on anorexia nervosa