PB21 | PB31 - Supply Chain Inventory Tracking | Supply Chain
Inventory in electronic supply chain-University of Ottawa-
-
Upload
morvarid-kardan -
Category
Technology
-
view
146 -
download
1
Transcript of Inventory in electronic supply chain-University of Ottawa-
![Page 1: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/1.jpg)
ADM – eSupply Chain Management
Morvarid Kardan , Sara Mohammadi, Sonia Peri
Dr. Mohamed Baymout
Inventory Management
Winter 2014
![Page 2: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/2.jpg)
Outline
• What is inventory • Myths in inventory management • Reasons for having inventory • Rolls of Inventory in SCM• Types of Demands • Benefits/Drawbacks• Methods for inventories• Inventory Techniques
![Page 3: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/3.jpg)
Supplier Manufacturing Distributer Retailer
Customer•Inventories
•Raw Materials •Work in Progress •Finished Goods
•Goods in Transit
•Finished Goods
SCM/Inventories
Traditional Supply Chain Management(SCM)
G.Trites, J.Boritz, “e-business strategies, a Canadian perspective for a networked world” ,Pearson-Prentice Hall, 2009
![Page 4: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/4.jpg)
What is Inventory?
Raw Materials Component parts Work-in-Process
Finished Products
Planning Directing
Controlling
![Page 5: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/5.jpg)
Myths in Inventory Management
The “SALES” data that we have in our company records, is all we need for inventory management”
“The more expensive a software system is, the better it will help us control our inventory“
“We keep all of our sales histories by month, and this data is all we need to make good forecasts for inventory planning”
![Page 6: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/6.jpg)
Reasons for Inventories
o Improve Customer Serviceo Economies of purchasingo Economies of Productiono Transportation Savingso Hedge against futureo Unplanned shocks(labor strikes, natural
disasters, surges in demand, etc)o To maintain independence in supply chain
![Page 7: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/7.jpg)
Goal
Role of Inventory in Supply Chain
Supply ChainUnderstocking : Demand exceeds amount available
- Lost margin and future sales
Overstocking : Amount available exceeds demand- Liquidation, Obsolescence, Holding
Matching Supply and Demand
![Page 8: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/8.jpg)
Types of DemandD
epen
dent
Independent
• Demand for items used to produce final products.
• Demand for items used by
external customers.
![Page 9: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/9.jpg)
Benefits of Inventory Management
Improve customer service
Reduce inventory investment
Increase the profitability of business
Increase productivity
Inventory is insurance
![Page 10: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/10.jpg)
Drawbacks of Keeping Inventory
• Inventory is expensive • Items deterioration • Products obsolescence
![Page 11: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/11.jpg)
Inventory Management Techniques
Stock Review
Just In Time
ABC Analysis
EOQ Model
![Page 12: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/12.jpg)
Methods For Supervising Inventory
• Manual Count Method• Periodic Methods• Perpetual Methods• LIFO and FIFO Methods (Valuation Method)
![Page 13: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/13.jpg)
Pros and ConsMethods Pros Cons
Manual Count Method Identifying and removing broken items
Time consuming
Periodic Method Less upfront costs Outdated inventory information
Perpetual Method The most up to date information
A lot of data need to be uploaded
LIFO Ideal for heavy products and producer of homogenous products
Not ideal for products that have expiration dates
FIFO Ideal for products that have expiration dates and products with relatively short demand cycles
Not suitable approach during the inflation period
![Page 14: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/14.jpg)
Inventory control Techniques
A
B
C
A: very importantB: importantC: marginally important
< Always better control (ABC) classification >
High Low
Annu
al $
Val
ue o
f Ite
ms
Percentage of Items Low
![Page 15: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/15.jpg)
Inventory Control Techniques<The EOQ Model>
Assumptions
![Page 16: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/16.jpg)
Two Types of Cost
– Costs of storage space (E.g. warehouse depreciation) – Security– Insurance– Forgone interest on working capital tied up in inventory– Deterioration, theft, spoilage, or obsolescence
– Clerical costs of preparing purchase orders – Some spent finding suppliers and expediting orders– Transportation costs– Receiving costs (E.g. unloading and inspection)
Holding Cost:
Ordering Cost:
![Page 17: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/17.jpg)
Development of EOQ Model
• (a.) Develop a COST EQUATION (MODEL) QUANTITIVELY and QUANTITIVELY
• TC = Holding cost + Setup Cost + DC
• (b.) Minimize the total cost equation (model) • (c.) Find REORDER QUANTITY
D = annual demand in units
C = cost of an individual item
![Page 18: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/18.jpg)
Lead time
Time
Inve
ntor
y Co
ntro
l
0
Minimum Inventory
Order Quantity [maximum inventory level]
Q
Usage Rate
Average inventory on hand Q/2
Inventory Usage Over Time
![Page 19: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/19.jpg)
Annu
al C
ost
Total Cost of Holding and Setup (order)
Holding Cost
Setup (order) Cost
Order Quantity Optimal Order Quantity (Q*)
Min
imum
to
tal c
ost
Minimizing Cost
![Page 20: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/20.jpg)
Inventory control Techniques<The EOQ Model>
Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order H = Holding or carrying cost per unit per year
Annual Holding Cost = (Number of orders placed per-year)*(Setup or order cost per order)
= { Average inventory level } { Holding cost per unit per year }
= {Q/2 } ( H )
![Page 21: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/21.jpg)
Annual Setup Cost = (Number of orders placed per-year)*(Setup or order cost per order)
= { Annual demand / Number of units in each order } { Setup or order cost per order }
= { D/Q } ( S )
Inventory control Techniques< The EOQ Model >
Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order H = Holding or carrying cost per unit per year
![Page 22: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/22.jpg)
Optimal order quantity is found when annual setup cost equals annual holding cost
{Q/2 } ( H ) = = { D/Q } ( S )
Q* = √2DS/H
< The EOQ Model > Q = Number of pieces per order
Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order
H = Holding or carrying cost per unit per year
![Page 23: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/23.jpg)
Unreliable Vendors
Scrap Capacity
Imbalances
Work in process inventory level(hides problems)
Lowering Inventory /Reduces Waste
Unreliable Vendors Scrap
Capacity Imbalances
Work in process inventory level
Unreliable Vendors Scrap
Capacity Imbalances
Work in process inventory level
Reducing inventory reveals problems so they
can be solved.
Excessive inventory mask the problems
Ahm
ad S
aym
il,,“O
pera
tions
Man
agem
ent:T
oyot
a Pr
oduc
tion
Syst
em (T
PS),
Just
-in-
Tim
e (J
IT),
and
Lean
Man
ufac
turin
g H
ando
ut”,
http:
//w
ww
.clt.
asta
te.e
du/a
syam
il/
![Page 24: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/24.jpg)
Videohttp://www.youtube.com/watch?v=1d0O8MAMyAM
![Page 25: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/25.jpg)
“One of the great responsibilities that I have is to manage my assets wisely, so that they create value.”
Alice Walton
![Page 26: Inventory in electronic supply chain-University of Ottawa-](https://reader035.fdocuments.net/reader035/viewer/2022070319/558540c1d8b42a5e018b4d19/html5/thumbnails/26.jpg)
Thank You!