Beruflich Dokumente
Kultur Dokumente
Inventory Management
Operations Management
Roberta Russell & Bernard W. Taylor, III
Beni Asllani
University of Tennessee at Chattanooga
Lecture Outline
12-2
What Is Inventory?
12-3
Types of Inventory
Raw materials
Purchased parts and supplies
Work-in-process (partially completed)
products (WIP)
Items being transported
Tools and equipment
Copyright 2006 John Wiley & Sons, Inc.
12-4
12-5
Dependent
Demand for items used to produce final
products
Tires stored at a Goodyear plant are an
example of a dependent demand item
Independent
Demand for items used by external
customers
Cars, appliances, computers, and houses
are examples of independent demand
inventory
12-6
12-7
Inventory Costs
Carrying cost
12-8
12-9
ABC Classification
Class A
5 15 % of units
70 80 % of value
Class B
30 % of units
15 % of value
Class C
50 60 % of units
5 10 % of value
Copyright 2006 John Wiley & Sons, Inc.
12-10
UNIT COST
ANNUAL USAGE
$ 60
350
30
80
30
20
10
320
510
20
90
40
130
60
100
180
170
50
60
120
12-11
ABC Classification:
Example (cont.)
PART
9
8
2
1
4
3
6
5
10
7
TOTAL
PART
VALUE
$30,600
1
16,000
2
14,000
3
5,400
4
4,800
5
3,900
3,600
6
CLASS
3,000
7
2,400
A
8
1,700
B
9
C
$85,400
10
% OF TOTAL % OF TOTAL
UNIT
ANNUAL
USAGE
VALUECOSTQUANTITY
% CUMMULATIVE
35.9
6.0
$ 60
18.7
5.0
350
16.4
4.0
30
6.3
9.0
5.680
6.0
4.630
10.0
4.220 % OF TOTAL
18.0
ITEMS
VALUE
3.510
13.0
12.0
9, 8,2.8
2
71.0
320
17.0
1, 4,2.0
3
16.5
5107
6, 5, 10,
12.5
20
6.0
90
11.0
A40
15.0
130
24.0
B60
30.0
100
40.0
% OF TOTAL
58.0
180
QUANTITY
71.0
170
C
83.0
50 15.0
100.0
25.0
60 60.0
120
Example 10.1
12-12
12-13
Assumptions of Basic
EOQ Model
Demand is known with certainty and is constant over time
No shortages are allowed
Lead time for the receipt of orders is constant
Order quantity is received all at once
12-14
Demand
rate
Reorder point, R
Lead
time
Order Order
placed receipt
Lead
time
Order Order
placed receipt
12-15
Time
D - annual demand
Q - order quantity
CoD
Q
CcQ
2
Total cost =
CoD
+
Q
CcQ
2
12-16
Deriving Qopt
TC =
Co D
+
Q
Co D
TC
=
+
Q2
Q
C0 D
0=
+
Q2
Qopt =
CcQ
2
Cc
2
Cc
2
2CoD
Cc
2CoD
=
Cc
Qopt =
12-17
2CoD
Cc
Total Cost
Slope = 0
Minimum
total cost
Optimal order
Qopt
Carrying Cost =
CcQ
2
Ordering Cost =
CoD
Q
Order Quantity, Q
12-18
EOQ Example
Cc = $0.75 per yard
Qopt =
2CoD
Cc
Qopt =
2(150)(10,000)
(0.75)
Co = $150
D = 10,000 yards
TCmin =
CoD
+
Q
CcQ
2
TCmin =
(150)(10,000)
2,000 +
(0.75)(2,000)
2
Production Quantity
Model
An inventory system in which an order is received
gradually, as inventory is simultaneously being
depleted
AKA non-instantaneous receipt model
assumption that Q is received all at once is relaxed
12-20
Q(1-d/p)
Maximum
inventory
level
Q
(1-d/p)
2
Average
inventory
level
0
Order
receipt period
Begin
End
order
order
receipt receipt
Time
12-21
d = demand rate
Q
d
p
=Q1- d
p
Q
d
Average inventory level =
1p
2
2CoD
Qopt =
Co D
CcQ
d
TC = Q + 2 1 - p
Copyright 2006 John Wiley & Sons, Inc.
12-22
d
Cc 1 p
Cc 1 - d
p
Co D
CcQ
d
TC = Q + 2 1 - p
Production run =
Q
=
p
D = 10,000 yards
p = 150 yards per day
2(150)(10,000)
= 2,256.8 yards
32.2
0.75 1 150
= $1,329
2,256.8
= 15.05 days per order
150
12-23
D
Q
10,000
= 4.43 runs/year
2,256.8
d
Maximum inventory level = Q 1 p
= 2,256.8 1 -
= 1,772 yards
12-24
32.2
150
Quantity Discounts
CoD
+
Q
CcQ
+ PD
2
where
P = per unit price of the item
D = annual demand
Copyright 2006 John Wiley & Sons, Inc.
12-25
PRICE
$10
8 (d1)
6 (d2)
TC (d1 = $8 )
TC (d2 = $6 )
Carrying cost
Ordering cost
Q(d1 ) = 100 Qopt
Copyright 2006 John Wiley & Sons, Inc.
Q(d2 ) = 200
12-26
PRICE
Co = $2,500
Cc = $190 per computer
D = 200
$1,400
1,100
900
2CoD
=
Cc
2(2500)(200)
= 72.5 PCs
190
TC =
CoD
+
Qopt
CcQopt
+ PD = $233,784
2
TC =
CoD
+
Q
CcQ
+ PD = $194,105
2
For Q = 90
12-27
Reorder Point
R = dL
where
d = demand rate per period
L = lead time
12-28
12-29
Safety Stocks
Safety stock
buffer added to on hand inventory during lead
time
Stockout
an inventory shortage
Service level
probability that the inventory available during lead
time will meet demand
12-30
Reorder
point, R
LT
LT
Time
12-31
Inventory level
Q
Reorder
point, R
Safety Stock
LT
LT
Time
12-32
12-33
Probability of
a stockout
Safety stock
zd L
dL
Demand
Copyright 2006 John Wiley & Sons, Inc.
R
12-34
Safety stock = z d L
= (1.65)(5)( 10)
= 326.1 yards
= 26.1 yards
12-35
tb + L = safety stock
I = inventory level
12-36
Q = d(tb + L) + zd
tb + L - I
= (6)(60 + 5) + (1.65)(1.2)
60 + 5 - 8
= 397.96 bottles
Copyright 2006 John Wiley & Sons, Inc.
12-37
12-38