inventory management ppt

32
Inventory Management Inventory Management

description

 

Transcript of inventory management ppt

Page 1: inventory management ppt

Inventory ManagementInventory Management

Page 2: inventory management ppt
Page 3: inventory management ppt
Page 4: inventory management ppt
Page 5: inventory management ppt
Page 6: inventory management ppt
Page 7: inventory management ppt
Page 8: inventory management ppt
Page 9: inventory management ppt
Page 10: inventory management ppt
Page 11: inventory management ppt
Page 12: inventory management ppt

Demand Demand raterate

TimeTimeLead Lead timetime

Lead Lead timetime

Order Order placedplaced

Order Order placedplaced

Order Order receiptreceipt

Order Order receiptreceipt

Inve

nto

ry L

evel

Inve

nto

ry L

evel

Reorder point, Reorder point, RR

Order quantity, Order quantity, QQ

00

Page 13: inventory management ppt

CCoo - cost of placing order - cost of placing order DD - annual demand - annual demand

CCcc - annual per-unit carrying cost - annual per-unit carrying cost QQ - order quantity - order quantity

Annual ordering cost =Annual ordering cost =CCooDD

QQ

Annual carrying cost =Annual carrying cost =CCccQQ

22

Total cost = +Total cost = +CCooDD

QQ

CCccQQ

22

Page 14: inventory management ppt

TC = +CoD

Q

CcQ

2

= +CoD

Q2

Cc

2

TC

Q

0 = +C0D

Q2

Cc

2

Qopt =2CoD

Cc

Deriving Qopt Proving equality of costs at optimal point

=CoD

Q

CcQ

2

Q2 =2CoD

Cc

Qopt =2CoD

Cc

Page 15: inventory management ppt

Order Quantity, Order Quantity, QQ

Annual Annual cost ($)cost ($) Total CostTotal Cost

Carrying Cost =Carrying Cost =CCccQQ

22

Slope = 0Slope = 0

Minimum Minimum total costtotal cost

Optimal orderOptimal order QQoptopt

Ordering Cost =Ordering Cost =CCooDD

QQ

Page 16: inventory management ppt
Page 17: inventory management ppt

QQ(1-(1-d/pd/p))

InventoryInventorylevellevel

(1-(1-d/pd/p))QQ22

TimeTime00

OrderOrderreceipt periodreceipt period

BeginBeginorderorder

receiptreceipt

EndEndorderorder

receiptreceipt

MaximumMaximuminventory inventory levellevel

AverageAverageinventory inventory levellevel

Page 18: inventory management ppt

pp = production rate = production rate dd = demand rate = demand rate

Maximum inventory level =Maximum inventory level = QQ - - dd

== QQ 1 - 1 -

QQpp

ddpp

Average inventory level = Average inventory level = 1 - 1 -QQ22

ddpp

TCTC = + 1 - = + 1 -ddpp

CCooDD

QQ

CCccQQ

22

QQoptopt = =22CCooDD

CCcc 1 - 1 - ddpp

Page 19: inventory management ppt

TCTC = + + = + + PDPDCCooDD

QQ

CCccQQ

22

wherewherewherewhere PP = per unit price of the item = per unit price of the itemDD = annual demand = annual demand

PP = per unit price of the item = per unit price of the itemDD = annual demand = annual demand

Page 20: inventory management ppt

QQoptopt

Carrying cost Carrying cost

Ordering cost Ordering cost

Inve

ntor

y co

st (

$)In

vent

ory

cost

($)

QQ((dd1 1 ) = 100) = 100 QQ((dd2 2 ) = 200) = 200

TC TC ((dd2 2 = $6 ) = $6 )

TCTC ( (dd1 1 = $8 )= $8 )

TC TC = ($10 )= ($10 ) ORDER SIZE PRICE

0 - 99 $10

100 – 199 8 (d1)

200+ 6 (d2)

Page 21: inventory management ppt

RR = = dLdL

Page 22: inventory management ppt

ReorderReorderpoint, point, RR

QQ

LTLT

TimeTimeLTLT

Inve

nto

ry le

vel

Inve

nto

ry le

vel

00

Page 23: inventory management ppt

ReorderReorderpoint, point, RR

QQ

LTLT

TimeTimeLTLT

Inve

nto

ry le

vel

Inve

nto

ry le

vel

00

Safety Stock

Page 24: inventory management ppt

RR = = dLdL + + zzdd L L

wherewhere

dd == average daily demandaverage daily demandLL == lead timelead time

dd == the standard deviation of daily demand the standard deviation of daily demand zz == number of standard deviationsnumber of standard deviations

corresponding to the service levelcorresponding to the service levelprobabilityprobability

zzdd L L == safety stocksafety stock

wherewhere

dd == average daily demandaverage daily demandLL == lead timelead time

dd == the standard deviation of daily demand the standard deviation of daily demand zz == number of standard deviationsnumber of standard deviations

corresponding to the service levelcorresponding to the service levelprobabilityprobability

zzdd L L == safety stocksafety stock

Page 25: inventory management ppt

Probability of Probability of meeting demand during meeting demand during lead time = service levellead time = service level

Probability of Probability of a stockouta stockout

RR

Safety stock

ddLLDemandDemand

zd L

Page 26: inventory management ppt

The carpet store wants a reorder point with a 95% The carpet store wants a reorder point with a 95% service level and a 5% stockout probabilityservice level and a 5% stockout probability

dd = 30 yards per day= 30 yards per dayLL = 10 days= 10 days

dd = 5 yards per day= 5 yards per day

For a 95% service level, For a 95% service level, zz = 1.65 = 1.65

RR = = dLdL + + zz dd L L

= 30(10) + (1.65)(5)( 10)= 30(10) + (1.65)(5)( 10)

= 326.1 yards= 326.1 yards

Safety stockSafety stock = = zz dd L L

= (1.65)(5)( 10)= (1.65)(5)( 10)

= 26.1 yards= 26.1 yards

Page 27: inventory management ppt

QQ = = dd((ttbb + + LL) + ) + zzdd ttbb + + LL - - II

wherewhere

dd = average demand rate= average demand ratettbb = the fixed time between orders= the fixed time between orders

LL = lead time= lead timedd = standard deviation of demand= standard deviation of demand

zzdd ttbb + + LL = safety stock= safety stock

II = inventory level= inventory level

Page 28: inventory management ppt
Page 29: inventory management ppt
Page 30: inventory management ppt
Page 31: inventory management ppt
Page 32: inventory management ppt