Upload
meryle
View
79
Download
5
Tags:
Embed Size (px)
DESCRIPTION
Inventory Management. Learning Objectives. Define the term inventory and list the major reasons for holding inventories; and list the main requirements for effective inventory management. Discuss the nature and importance of service inventories - PowerPoint PPT Presentation
Citation preview
1
Inventory Management
2
Learning Objectives
• Define the term inventory and list the major reasons for holding inventories; and list the main requirements for effective inventory management.
• Discuss the nature and importance of service inventories
• Discuss the objectives of inventory management.
• Describe the A-B-C approach and explain how it is useful.
3
Learning Objectives
• Describe the basic EOQ model and its assumptions and solve typical problems.
• Describe the economic production quantity model and solve typical problems.
• Describe reorder point models and solve typical problems.
12-4
• Examples:– Parts in a factory– Paper towels in your cupboard– Customers on hold– Paperwork in secretary’s in-box
• Not limited to physical products
Inventory is DELAY in business process.
What is inventory?
12-5
What is inventory?
TransformationInput OutputRaw materials• Materials received• Customers waiting
in a bank• Paperwork in in-
box
Work-in-Process• Semi-finished
products• Customers at the
counter• Paperwork on
desk
Finished goods• Products waiting
to be shipped• Customers
leaving the bank• Paperwork in out-
box
Within organization:
Between organizations: Goods-in-transit
6
Types of Inventories
1. Raw materials & purchased parts
2. Partially completed goods called work in progress (WIP)
3. Finished-goods inventories (manufacturing firms or merchandise, retail stores)
7
Types of Inventories (Cont’d)
4. Replacement parts, tools, & supplies
5. Goods-in-transit to warehouses or customers
8
Functions of Inventory
• To meet anticipated demand (anticipation stock)
• To maintain continuity of operations (buffer stock)
• To protect against stock-outs, i.e. decrease the risk of shortages due to delayed delivery and unexpected increases in demand, (safety stock)
• To take advantage of quantity discounts
9
Objective of Inventory Control
• To achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds (limits), there are 2 concerns:
1. Level of customer service
• Right goods (in sufficient quantities)
• Right place
• Right time
2. Costs of ordering and carrying inventory
10
• A system to keep track of inventory
• A reliable forecast of demand
• Knowledge of lead times
• Reasonable estimates of
– Holding costs
– Ordering costs
– Shortage costs
• A classification system
Effective Inventory Management
11
Inventory Tracking Systems
• Periodic SystemPhysical count of items made at periodic intervals
• Perpetual Inventory System System that keeps track of removals from inventory continuously, thus monitoringcurrent levels of each item
Perpetual = all-time, เป็�นไป็อย่�างต่�อเน� อง ต่ลอดเวลา
12
Inventory Tracking Systems (Cont’d)
• Two-Bin System - Two containers of inventory; reorder when the first is empty
• Universal Product Code (UPC) - Bar code printed on a label that hasinformation about the item to which it is attached
0
214800 232087768
13
ABC Classification System
Classifying inventory according to some measure of importance and allocating control efforts accordingly.
AA - very important
BB - mod. important
CC - least important Annual $ value of items
AA
BB
CC
High
Low
Low HighPercentage of Items
14
ABC Classification SystemItem # Annual demand Unit cost
($)Annual Dollar Value
1 2500 360
2 1000 70
3 2,400 500
4 1500 100
5 700 70
6 1000 1000
7 200 210
8 1000 4000
9 8000 10
10 500 200
15
ABC Classification SystemItem Annual Dollar value Classification % items % Annual
Dollar value
8 4,000,000 A 10
3 1,200,000 B 30
6 1,000,000 B
1 900,000 B
4 150,000 C 60
10 C
9 C
2 C
5 C
7 CA item is 10 -20% of the number of items but 60-70% of the annual dollarC item is 50-60% of the number of items but 10-15% of the annual dollarNormally, A items should receive close attention (frequent reviews) while C items should receive only loose control.
16
Cycle Counting
• A physical count of items in inventory
• Cycle counting management
– How much accuracy is needed? (± 0.2% for A items, ± 1% B items, and ± 5% C items)
– When should cycle counting be performed?
– Who should do it?
17
Inventory Models
• Independent demand – finished goods, items that are ready to be sold– E.g. a computer
• Dependent demand – components of finished products– E.g. parts that make up the computer
18
Independent Demand Items
A
B(4) C(2)
D(2) E(1) D(3) F(2)
Dependent Demand Items
Inventory Models
19
• Economic order quantity (EOQ) model
– The order size that minimizes total annual cost
• Economic production model
• Quantity discount model
Economic Order Quantity Models
20
• Only one product is involved
• Annual demand requirements known
• Demand is even throughout the year
• Lead time does not vary
• Each order is received in a single delivery
• There are no quantity discounts
Assumptions of EOQ Model
21
The Inventory Cycle
Profile of Inventory Level Over Time
Quantityon hand
Q
Receive order
Placeorder
Receive order
Placeorder
Receive order
Lead time
Reorderpoint
Usage rate
Time
22
The Inventory Cycle
Large Q
Time
Small Q
23
Total Cost
Annualcarryingcost
Annualorderingcost
Total cost = +
TC = Q2
H DQ
S+
24
Cost Minimization Goal
Order Quantity (Q)
The Total-Cost Curve is U-Shaped
Ordering Costs
QO
An
nu
al C
os
t
(optimal order quantity)
TCQH
D
QS
2
25
Deriving the EOQ
Using calculus, we take the derivative of the total cost function and set the derivative (slope) equal to zero and solve for Q.
Q = 2DS
H =
2(Annual Demand)(Order or Setup Cost)
Annual Holding CostOPT
26
Minimum Total Cost
The total cost curve reaches its minimum where the carrying and ordering costs are equal.
Q2
H DQ
S=
27
• Production done in batches or lots
• Capacity to produce a part exceeds the part’s usage or demand rate
• Assumptions of EPQ are similar to EOQ except orders are received incrementally during production
Economic Production Quantity (EPQ)
28
• Only one item is involved
• Annual demand is known
• Usage rate is constant
• Usage occurs continually
• Production rate is constant
• Lead time does not vary
• No quantity discounts
Economic Production Quantity Assumptions
29
EPQ: Inventory Profile
Q
Q*
Imax
Productionand usage
Productionand usage
Productionand usage
Usageonly
Usageonly
Cumulativeproduction
Amounton hand
Time
30
EPQ – Total Cost
rate Usage
ratedelivery or Production
inventory Maximum
where
2
Cost SetupCost CarryingTC
max
max
u
p
upp
Q
I
SQ
DH
I
31
Economic Run Size
QDS
H
p
p u0
2
32
Total Costs with Purchasing Cost
Annualcarryingcost
PurchasingcostTC = +
Q2
H DQ
STC = +
+Annualorderingcost
PD +
33
Total Costs with PDC
ost
EOQ
TC with PD
TC without PD
PD
0 Quantity
Adding Purchasing costdoesn’t change EOQ
34
Total Cost with Constant Carrying Costs
OC
EOQ Quantity
To
tal C
os
t
TCa
TCc
TCbDecreasing Price
CC a,b,c
35
Quantity Discounts
36
Quantity Discounts
37
When to Reorder
• Reorder point– When the quantity on hand of an item drops to this
amount, the item is reordered.– Determinants of the reorder point
1. The rate of demand
2. The lead time
3. The extent of demand and/or lead time variability
4. The degree of stockout risk acceptable to management
38
Reorder Point: Under Certainty
) as units timesame(in timeLeadLT
per week) day,per period,per (units rate Demand
where
LTROP
d
d
d
39
Reorder Point: Under Uncertainty
• Demand or lead time uncertainty creates the possibility that demand will be greater than available supply
• To reduce the likelihood of a stockout, it becomes necessary to carry safety stock– Safety stock
• Stock that is held in excess of expected demand due to variable demand and/or lead time
StockSafety timelead during
demand Expected ROP
40
Safety Stock
LT Time
Expected demandduring lead time
Maximum probable demandduring lead time
ROP
Qu
an
tity
Safety stock
12-40
Safety stock reduces risk ofstockout during lead time
41
Safety Stock?
• As the amount of safety stock carried increases, the risk of stockout decreases.– This improves customer service level
• Service level– The probability that demand will not exceed supply
during lead time– Service level = 100% - Stockout risk
12-41
42
How Much Safety Stock?
• The amount of safety stock that is appropriate for a given situation depends upon:
1. The average demand rate and average lead time
2. Demand and lead time variability
3. The desired service level
demand timelead ofdeviation standard The
deviations standard ofNumber
where
timelead duringdemand Expected
ROP
dLT
dLT
z
z
43
Distribution of Lead Time Demand
44
Reorder Point
ROP
Risk ofa stockout
Service level
Probability ofno stockout
Expecteddemand Safety
stock0 z
Quantity
z-scale
The ROP based on a normalDistribution of lead time demand
45
Reorder Point: Demand Uncertainty
) as units time(same timeLead LT
) as units time(same periodper demand of stddev. The
per week) day,(per periodper demand Average
deviations standard ofNumber
where
LTLT ROP
d
d
d
z
zd
d
d
LT :Note ddLT
46
Reorder Point: Lead Time Uncertainty
) as units time(same timelead Average LT
) as units time(same timelead of stddev. The
per week) day,(per periodper Demand
deviations standard ofNumber
where
LT ROP
LT
LT
d
d
d
z
zdd
LTdLT d :Note
47
Reorder Point: both Demand and Lead Time are uncertain (variable)
2
LT
22
LT
LT
LT
where
LT ROP
d
zd
dd
d
48
ROP equations of different cases
49
• Orders are placed at fixed time intervals• Order quantity for next interval?• Suppliers might encourage fixed intervals• May require only periodic checks of
inventory levels• Risk of stockout• Fill rate – the percentage of demand filled
by the stock on hand
Fixed-Order-Interval Model
50
• Tight control of inventory items• Items from same supplier may yield
savings in:– Ordering– Packing– Shipping costs
• May be practical when inventories cannot be closely monitored
Fixed-Interval Benefits
51
• Requires a larger safety stock
• Increases carrying cost
• Costs of periodic reviews
Fixed-Interval Disadvantages
52
Fixed-Quantity vs. Fixed-Interval Ordering
53
When to order How much to order
Fixed-quantity (orders are triggered by a quantity)
Fixed-quantity (orders are triggered by a quantity)
Fixed-interval (orders are triggered by time)
Fixed-interval (orders are triggered by time)
Amount for order = Expected demand during production interval + SS – Amount on hand at reorder time =
LT ROP dzLTd
H
2DS = EOQ
OI isit DH
2S =
Period)Order (Economic EOP
ALTOIzLTOId d )(
demand safety stock
excel
54
Exp 1บริ�ษั�ทเคริ� องซั�กผ้�า กริ�งเทพ จำ าก�ด ผ้!�ป็ริะกอบเคริ� องซั�กผ้�าจำ าหน�าย่ท�$งภาย่ในและต่�างป็ริะเทศ ก าล�งพ�จำาริณานโย่บาย่การิสั่� งซั�$อมอเต่อริ-ริ� �น A1 ท. ใช้�ในการิป็ริะกอบเคริ� องซั�กผ้�าเพ� อให�ม.ความถู!กต่�องและเช้� อถู�อได�มากย่� งขึ้2$น โดย่ก าหนดริะด�บบริ�การิ (service Level) ไว�ท. 95% ผ้!�จำ�ดการิฝ่4าย่ว�สั่ด�ได�ริ�บหมอบหมาย่จำากทางบริ�ษั�ทให�ท าหน�าท. ว�เคริาะห-ป็5ญหาด�งกล�าวน.$ โดย่ได�ริ�เริ� มริวบริวมขึ้�อม!ลจำากอด.ต่ท. ผ้�านมาด�งน.$
อ�ต่ริาการิใช้�ต่�อป็7 = 3000 หน�วย่ค�าใช้�จำ�าย่ในการิสั่� งซั�$อต่�อคริ�$ง = 1000 บาทต่�นท�นในการิถู�อคริองขึ้องคงคล�ง = 35% ต่�อป็7ต่�นท�นมอเต่อริ-ต่�อหน�วย่ = 1000 บาท(อ�ต่ริาการิใช้� = 55 หน�วย่/สั่�ป็ดาห-)(ค�าเบ. ย่งเบนมาต่ริฐานขึ้องอ�ต่ริาการิใช้� = 20.2 หน�วย่ต่�อสั่�ป็ดาห-)ช้�วงเวลาน าในการิสั่� งซั�$อ 1 สั่�ป็ดาห-ค�อนขึ้�างคงท. ขึ้�อม!ลอ�ต่ริาการิใช้�ค�อนขึ้�างจำะม.ความแป็ริป็ริวนโดย่ผ้!�จำ�ดการิฝ่4าย่ว�สั่ด�ได�ริวบริวมขึ้�อม!ลอ�ต่ริาการิใช้�ต่�อสั่�ป็ดาห- จำากอด.ต่ท. ผ้�านมาล�าสั่�ด 63 สั่�ป็ดาห- ด�งแสั่ดงในต่าริางถู�ดไป็โดย่ขึ้�อม!ลม.การิกริะจำาย่แบบป็กต่�หาขึ้นาดริ� �นขึ้องการิสั่� งซั�$อท. ป็ริะหย่�ดสั่�ด(EOQ)มต่�นท�นริวมการิควบค�มขึ้องคงคล�ง (TC), จำ�ดสั่� งซั�$อใหม� (ROP)
55
อ�ต่ริาการิใช้�ใน 1 สั่�ป็ดาห- ความถู. ท. เก�ดขึ้2$นขึ้องอ�ต่ริาการิใช้�
10 1
20 2
30 5
40 12
50 15
60 11
70 7
80 4
90 3
100 2
110 1
ริวม 63
56
Exp 2
จำากต่�วอย่�างในขึ้�อ 1 ถู�าบริ�หาริขึ้องคงคล�งภาย่ใต่�ริะบบริอบเวลาสั่� งคงท. โดย่ใช้�ขึ้�อม!ลเด�มด�งน.$
อ�ต่ริาการิใช้�ต่�อป็7 = 3000 หน�วย่ค�าใช้�จำ�าย่ในการิสั่� งซั�$อต่�อคริ�$ง = 1000 บาทต่�นท�นในการิถู�อคริองขึ้องคงคล�ง = 35% ต่�อป็7ต่�นท�นมอเต่อริ-ต่�อหน�วย่ = 1000 บาทอ�ต่ริาการิใช้� = 55 หน�วย่/สั่�ป็ดาห-ค�าเบ. ย่งเบนมาต่ริฐาน = 20.2 หน�วย่ต่�อสั่�ป็ดาห-ช้�วงเวลาน าในการิสั่� งซั�$อ 1 สั่�ป็ดาห-ค�อนขึ้�างคงท. ก าหนดให� 1ป็7 สั่�ป็ดาห- หริ�อ 365 ว�น
หมาย่เหต่� หากในการิสั่� งซั�$อมอเต่อริ-ริอบน.$ ม.ขึ้องคงคล�งเหล�ออย่!� 110 หน�วย่
57
บริ�ษั�ท เคริ� องซั�กผ้�ากริ�งเทพ ท. ได�กล�าวถู2งในต่�วอย่�างแล�วต่�องการิว�เคริาะห-ขึ้องคงคล�งท. ม.ความสั่ าค�ญอ.กริาย่การิหน2 ง ค�อ ใบพ�ดขึ้องเคริ� องซั�กผ้�า ซั2 งเป็�นช้�$นสั่�วนพลาสั่ต่�กค�ณภาพด. โดย่ก าหนดริะด�บบริ�การิไว�ท. (service level) 98% ขึ้อม!ลท. ได�จำากการิริงบริวมในอด.ต่ม.ด�งต่�อไป็น.$
อ�ต่ริาการิใช้�ต่�อป็7 = 6000 หน�วย่ค�าใช้�จำ�าย่ในการิสั่� งซั�$อต่�อคริ�$ง = 1000 บาทต่�นท�นในการิถู�อคริองขึ้องคงคล�ง = 25% ต่�อป็7ต่�นท�นมอเต่อริ-ต่�อหน�วย่ = 400 บาทอ�ต่ริาการิใช้� = 20 หน�วย่/ว�น (คงท. )
ขึ้�อม!ลช้�วงเวลาในการิน าสั่�งมอบ (lead time) จำากผ้!�สั่�งมอบม.ความแป็ริป็ริวน โดย่ขึ้�อม!ลขึ้องเวลาในการิน าสั่�งมอบท. ได�จำากการิแสั่ดงได�จำากต่าริางด�งน.$
58
ช้�วงเวลาน า (ว�น) ความถู. ท. เก�ดขึ้2$นขึ้องช้�วงเวลาน า
10 1
11 6
12 7
13 22
14 9
15 3
16 1
17 1
ริวม 50