Inventory management

11-1InventoryManagementInventoryManagement(IM)11-2InventoryManagementIndependentDemandAB(4)C(5)D(2)E(1)D(3)F(2)DependentDemandIndependentdemandisuncertain.Dependentdemandiscertain.Inventory:astockorstoreofgoodsTheTypesofDemand11-3InventoryManagementLeadtimeHolding(carrying)costsOrderingcostsShortagecostsKeyInventoryTerms11-4InventoryManagementTypesofInventoriesRawmaterials&purchasedpartsPartiallycompletedgoodsFinished-goodsinventories(manufacturingfirms)ormerchandise(retailstores)11-5InventoryManagementTypesofInventories(Cont’d)Replacementparts,tools,&suppliesGoods-in-transittowarehousesorcustomers11-6InventoryManagementFunctionsofInventoryTomeetanticipateddemandTosmoothproductionrequirementsTodecoupleoperationsToprotectagainststock-outs11-7InventoryManagementFunctionsofInventory(Cont’d)TotakeadvantageofordercyclesTohelphedgeagainstpriceincreasesTopermitoperationsTotakeadvantageofquantitydiscounts11-8InventoryManagementObjectiveofInventoryControlToachievesatisfactorylevelsofcustomerservicewhilekeepinginventorycostswithinreasonablelevelLevelofcustomerserviceCostsoforderingandcarryinginventory11-9InventoryManagementAsystemtokeeptrackofinventoryAreliableforecastofdemandKnowledgeofleadtimesReasonableestimatesofHoldingcostsOrderingcostsShortagecostsAclassificationsystemEffectiveInventoryManagement11-10InventoryManagementABCClassificationSystemClassifyinginventoryaccordingtosomemeasureofimportanceandallocatingcontroleffortsaccordingly.A-veryimportantB-mod.importantC-leastimportantFigure11.1Annual$valueofitemsABCHighLowFewManyNumberofItems11-11InventoryManagementEconomicorderquantitymodelEconomicproductionmodelQuantitydiscountmodelEconomicOrderQuantityModels11-12InventoryManagementOnlyoneproductisinvolvedAnnualdemandrequirementsknownDemandiseventhroughouttheyearLeadtimedoesnotvaryEachorderisreceivedinasingledeliveryTherearenoquantitydiscountsAssumptionsofEOQModel11-13InventoryManagementTheInventoryCycleFigure11.2ProfileofInventoryLevelOverTimeQuantityonhandQReceiveorderPlaceorderReceiveorderPlaceorderReceiveorderLeadtimeReorderpointUsagerateTime11-14InventoryManagementTotalCostAnnualcarryingcostAnnualorderingcostTotalcost=+Q2CDQSTC=+11-15InventoryManagementCostMinimizationGoalOrderQuantity(Q)TheTotal-CostCurveisU-ShapedOrderingCostsQOAnnualCost(optimalorderquantity)SQDCQTC2Figure11.4C11-16InventoryManagementDerivingtheEOQUsingcalculus,wetakethederivativeofthetotalcostfunctionandsetthederivative(slope)equaltozeroandsolveforQ.CostHoldingAnnualCost)SetuporderDemand)(Or2(Annual=C2DS=QOPT11-17InventoryManagementThankyou!Name:MazhijunAnyquestion,plscontact:Celephonenumber:13523499527Email:[e-mail]