Independent-Demand-Inven課件

1、Independent-Demand InventoryChapter 15INTRODUCTION to Operation Management 4e, SchroederCopyright 2008 by The McGraw-Hill Companies, Inc., All Rights Reserved.McGraw-Hill/IrwinChapter OutlineIntroductionPurpose of InventoriesInventory Cost StructuresIndependent versus Dependent DemandEconomic Order

2、QuantityContinuous Review SystemPeriodic Review SystemUsing P and Q System in PracticeABC Inventory Management2IntroductionInventory: a stock of materials used to facilitate production or to satisfy customer demand.Types of inventoryRaw materials/purchased parts (RM/PP)Work in process (WIP)Finished

3、goods (FG)Maintenance, repair & operating supplies (MRO)3A Material-Flow ProcessWork inprocessWork inprocessWork inprocessFinishedgoodsRawMaterialsVendorsCustomerProductive Process4A Water Tank Analogy for InventorySupply RateInventory LevelDemand RateInventory Level5Purpose of Inventories (1)To pro

4、tect against uncertainties in demand (finished goods, MRO)supply (RM/PP, MRO)lead times (RM/PP or WIP)schedule changes (WIP)To allow economic production and purchase (as in discounts for buying RM/PP in bulk)6Purpose of Inventories (2)To cover anticipated changes in demand (as in a level strategy) o

5、r supplyfinished goodsRM/PPTo provide for transit (pipeline inventories)RM/PPfinished goodsWIP (independence of operations)7Inventory Cost Structures (1)Item or SKU costExpressed as cost per unit or SKU. Gets into LIFO and FIFO issues. Problem can be compounded by quantity discounts.8Inventory Cost

6、Structures (2)Ordering (or setup) costPaperwork, worker time (ordering)worker time, downtime (setup)Typically expressed as a fixed cost per order or setup. 9Inventory Cost Structures (3)Carrying (or holding) cost:Cost of capital (market rate or internal rate of return)Cost of storage (building, util

7、ities, insurance, handling)Cost of obsolescence, deterioration, and loss (shrinkage)Management cost (record keeping, counting)Typically expressed as a percentage of SKU cost. Average in U.S. is estimated to be 35 percent per year.Businesses often use only cost of capital (understatement).10Inventory

8、 Cost Structures (4)How the 35 percent carrying cost is distributedCost of Capital9-20 percentObsolescence2-5 percentStorage2-5 percentMaterial Handling1-3 percentShrinkage1-3 percentTaxes & Insurance1-3 percentSource: Mark Williams, APICS Instructor Listserv, 22 January 200111Inventory Cost Structu

9、res (5)Shrinkage“shrinkagecost U.S. retailers about $41.6 billion last year.” This is more than the combined total from other crimes such as robberies, auto theft and larceny.Source: Wall Street Journal, 11 July 2007, p. B4.12Inventory Cost Structures (6)Stock out cost (back order or lost sales)reco

10、rd maintenancelost incomecustomer dissatisfactionTypically expressed as a fixed cost per backorder or as a function of aging of backorders.13Two Forms of Demand (1)Independent demand (this chapter)finished goods, spare parts, MRObased on market demandrequires forecastingmanaged using replenishment p

11、hilosophy, i.e. reorder when reach a pre-specified level.14Two Forms of Demand (2)Dependent demand (next chapter)parts that go into the finished products, RM/PP or WIPdependent demand is a known function of independent demandcalculate instead of forecastManaged using a requirements philosophy, i.e.

12、only ordered as needed for higher level components or products.15Figure 15.4: Demand PatternsA pattern plus random influencesLumpy because of production lots16Economic Order Quantity (EOQ)Developed in 1915 by F.W. HarrisAnswers the question How much do I order?Used for independent demand items.Objec

13、tive is to find order quantity (Q) that minimizes the total cost (TC) of managing inventory.Must be calculated separately for each SKU.Widely used and very robust (i.e. works well in a lot of situations, even when its assumptions dont hold exactly). 17Economic Order Quantity (EOQ)Basic Model Assumpt

14、ionsDemand rate is constant, recurring, and known.Lead time is constant and known.No stockouts allowed.Material is ordered or produced in a lot or batch and the lot is received all at onceCosts are constantUnit cost is constant (no quantity discounts)Carrying cost is a constant per unit (SKU)Orderin

15、g (setup) cost per order is fixedThe item is a single product or SKU.18EOQ Lot Size ChoiceThere is a trade-off between frequency of ordering (or the size of the order) and the inventory level.Frequent orders (small lot size) lead to a lower average inventory size, i.e. higher ordering cost and lower

16、 holding cost.Fewer orders (large lot size) lead to a larger average inventory size, i.e. lower ordering cost and higher holding cost.19Figure 15.5: EOQ Inventory Levels(sawtooth model)TimeLot size = QOrderIntervalAverage InventoryLevel = Q/2On Hand20Notations and measurement units in EOQD =Demand r

17、ate, units per yearS =Cost per order placed, or setup cost,dollars per orderC =Unit cost, dollars per uniti =Carrying rate, percent of value per yearQ =Lot size, unitsTC=total of ordering cost plus carrying cost21Cost Equations in EOQOrdering cost = (cost per order) x orders per year) = SD/QCarrying

18、 cost per year = (annual carrying rate) x (unit cost) x average inventory = iCQ/2Total annual cost (TC) = ordering cost per year + carrying cost per year = SD/Q + iCQ/222Total Cost of Inventory23TC and EOQTC = ordering cost + holding cost = S*(D/Q) + iC*(Q/2) EOQ =note: Although we have used annual

19、costs, any time period is all right. Just be consistent! The same is true for currency designations.24EOQ ExampleSales = 10 cases/weekS = $12/orderi = 30 pct/yearC = $80/case _EOQ = (2SD)/iC= SQRT(2*12*10*52)/(80*.3)= SQRT12,480/24 = 22.8 cases/orderTC = ordering cost + holding cost= S*(D/Q) + iC*(Q

20、/2) = 10(520/22.8) + 24 * 11.4= 228.70 + 273.60 = $547.28/yearIf order 22 cases instead, TC = $547.64; if 23, TC = $547.3025EOQ Example26Continuous Review SystemRelax assumption of constant demand. Demand is assumed to be random.Check inventory position each time there is a demand (i.e continuously)

21、.If inventory position drops below the reorder point, place an order for the EOQ.Also called fixed-order-quantity or Q system (the fixed order size is EOQ).27Figure 15.7: A Continuous Review (Q) SystemR = Reorder PointQ = Order QuantityL = Lead time28A Continuous Review (Q) SystemAmount to order = E

22、OQOrder when inventory position = reorder point.Reorder point = lead time * demand/period= R= lead time demand (when demand is constant)Reorder point is independent of EOQ!EOQ tells how much to order.Reorder point tells when to order.29Service LevelWhen demand is random, the reorder point must take

23、into account the service level or fill rate.Service level has many definitions:Probability that all orders will be refilled while waiting for an order to arrive.Percentage of demand filled from stock in a time period.Percentage of time the system has stock on hand.30Figure 15.8: Probability Distribu

24、tion of Demand over Lead Timem = mean demandR = Reorder points = Safety stock31Reorder PointThe reorder point is defined as:R = m + swhere: R = reorder point m = mean lead time demand s = safety or buffer stockUsing the normal distribution:s = zwhere: z = safety factor (from normal table) = standard

25、 deviation of lead time demandThus:R = m + z32Periodic Review System (1)Instead of reviewing continuously, we review the inventory position at fixed intervals. For example, the bread truck visits the grocery store on the same days every week.Inventory brought up to a target levelAlso known as “P sys

26、tem”, “Fixed-order-interval system” or “Fixed-order-period system”33Periodic Review System (2)Has a target inventory rather than a reorder point.Does not have EOQ since quantity varies according to demand.The order interval is fixed, not the order quantity.34Figure 15.9: A Periodic Review (P) System

27、35Time Between Orders (P) andTarget Level (T) CalculationWhere:T = target inventory levelm = average demand over P+Ls = safety stock36Using P and Q System in PracticeUse P system when orders must be placed at specified intervals.Use P systems when multiple items are ordered from the same supplier (j

28、oint-replenishment).Use P system for inexpensive items.37Using P and Q Systems in PracticeP may be easier to use since levels are reviewed less often.P requires more safety stock since may only order at fixed points.P is more likely to run out since cannot respond to increases in demand immediatelyEither may be more costly: P in safety stock, Q in monitoring cost.38Figure 15.10: Service