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Профессиональный Документы
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S1
DC1
S2
DC2
S3
DC3
Sn
DCn
W/H
Plant/Mfg
Plant
W/H
Transportation deregulation
Communications and information technologies
Improvements in inventory velocity
Product proliferation
Interest rates/cost of capital
GDP
($ trillion)
2.78
4.18
5.75
5.92
6.24
6.56
6.95
7.27
7.64
8.08
Inventory
($ billion)
717
865
1,071
1,060
1,072
1,106
1,163
1,249
1,280
1,325
Inv. as a
% of GDP
25.8%
20.7%
18.6%
17.9%
17.2%
16.9%
16.7%
17.2%
16.8%
16.4%
Ford Motor
General Electric
Philip Morris
Sony
Current
Total
Sales
Assets
($ billion) ($ billion)
Manufacturing
$118.1
262.8
62.1
304.0
72.1
54.9
6.8
6.4
Bergen Brunswig
Fleming Co.
K-Mart
The Limited
Kroger
Company
Average
Inventory
($ billion)
Inv. as a %
of Total
Assets
6.7
5.9
9.0
1.0
2.5%
1.9%
16.4%
15.6%
1.60
1.05
3.50
1.00
1.81
53.0%
26.2%
25.7%
23.3%
28.7%
Inventory Turnover =
Example: K-Mart
1992 Sales
1992 Avg. Inv.
Inventory Turnover
Sales
Average Inventory
=
$38.8 billion
$8.8 billion
=
=
$38.8 billion
$8.8 billion
turns/year
Average Days
=
Inventory on Hand
Avg. Inv.
Sales
x 365
=
=
$8.8
x 365
$38.8
Days
Average
Inventory
$200,000
100,000
66,667
50,000
40,000
33,333
28,571
25,000
22,222
20,000
Carrying Cost
at 30%
$60,000
30,000
Carrying Cost
Savings
---$30,000
15,000
12,000
10,000
8,571
7,500
6,667
6,000
5,000
3,000
2,000
1,429
1,071
833
667
10
Inventory Turns
Seasonal stock
Promotional stock
Sales and deals
Speculative stock
Fluctuating price and/or availability
When using long supply lines
Dead stock
Inventory Costs
Carrying
Costs
Expected
Stockout
Costs
Order/
Setup
Costs
Observations
Deterioration
Obsolescence
Damage
Pilferage and theft
#1
#2
$5
#3
$10
#4
$15
$20
Measure Carrying
Cost Components
Multiply Percent by
Value
Example:
Capital Cost
Storage Space
Inv. Service
Inv. Risk
Example:
Value = $50 per item
38%
20%
8%
4%
6%
Inventory In-Transit
vs.
Inventory in DC
Same
Not relevant to inventory in-transit
Taxes - not relevant
Insurance - need to consider
Exposure is less for inventory in-transit
Percentage of Dollars
80
60
40
20
0
0
10
20
30
40
50
60
Percentage of Items
70
80
90
100
Measuring Effectiveness of
Inventory Management
End-Users Satisfied?
Frequent Need for Backordering or
Expediting?
Order Cancellations?
Inventories Available at Right Locations?
Measures of Inventory Turnover
Too low?
Too high?
Chapter 6
Inventory Decision Making
Fundamental Approaches
Fixed Order Quantity
Fixed Order Interval
Inventory at Multiple
Locations
Time Based Approaches
QR and ECR
Comparison of Various
Methods
Fundamental Approaches
Nature of Demand
Independent vs. Dependent
Two Tradeoffs
Basic Tradeoffs
As order quantity
(EOQ) increases:
Annual Cost
Annual inventory
carrying cost also
increases
Annual ordering cost
decreases
Cost
Cost
Size of Order Quantity
Sawtooth Models
Units
600
400
1/2Q
200
20
40
60
Time
Mathematical Formulation
Total Annual Cost = Annual Inventory Carrying
Cost + Annual Ordering Cost
Letting TAC = Annual Total Cost ($)
R = Annual demand (units)
A = Cost of placing a single order ($)
V = Value of one unit of inventory ($)
W = Inventory carrying cost as a % of product value
Q = EOQ
2 RA
VW
Example of EOQ
R = Annual demand = 600 units
A = Order cost = $4/order
V = Product value = $240/unit
W = inventory carrying cost = 20% = 0.20
2 RA
VW
2( 600)4
(240)( 0.20)
100
4,800
48
Example of TAC:
R = Annual demand = 600 units
A = Order cost = $4/order
V = Product value = $240/unit
W = inventory carrying cost = 20% = 0.20
Then:
TAC = 1/2 QVW + A (R/Q)
1/2 (10) (240) (0.20) + (4) (600/10)
240
+ 240
$480
24 units
EOQ Review
Perhaps the most well-know, traditional approach to
managing inventory
computes an optimum value for the economic order
quantity (EOQ) based on a trade-off of two types of cost:
Inventory carrying cost
Ordering cost or setup cost
Related Concepts
Two-bin system
Min-max system
demand may occur in larger increments than
with the traditional EOQ approach
ROP
Qm
Safety
Stock
Time
Units
$3,000
$2,000
$1,000
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2
Time (weeks)
x2 x1
n2
n1
n2
= 50,000
n1
27
3
Time
horizons
Information
Supplier/
Manufacturer
relationships
Logistics
Basic
Elements
of QR
Philosophical/
Cultural
change
Manufacturing
operations
QR Profit Sources
Faster Order Placement
Shorter Lead Times
Fast Response to
Sales Trends
Lower Markdowns
Higher Sales
Higher Sales
Lower Markdowns
Greater
Profitability
Reduced Total
Channel Costs
$
Total Cost
Traditional
QR
Total Cost
Manufacturing
Transportation
Materials Handling
Inventory
Traditional
QR
66
60
46
50
40
30
Retail
Apparel
Textile
Fiber
21
20
10
0
Present
Q.R.
Q.R.+
Supplier
Distributor
Retail Store
Consumer
Household
Source: Kurt Salmon Associates, Inc. Efficient Consumer Response: Enhancing Consumer Value in the Grocery Industry
ECR
Components
Category management (Managing product groups as strategic
business units)
Integrated electronic data interchange (EDI)
Activity-Based Costing (ABC)
Continuous replenishment programs
Flow-through cross-dock replenishment
Benefits
Better - products, assortments, in-stock performance, and prices
Leaner, faster, more responsive, less costly supply chain
Improved asset utilization
Suppler
Warehouse
38 days
Distributor
Warehouse
40 days
Retail
Store
26 days
104 days
Suppler
Distributor
Warehouse Warehouse
27 days
12 days
61 days
Retail
Store
22 days
C
o
n
s
u
m
e
r
P
u
r
c
h
a
s
e
18.3
89.2
g Profit
Store O
5.0
9.8
ps
16.4
Administ
ration
Logistics
Selling/Buying
8.1
4.1
9.7
4.8
6.2
3.0
8.2
Marketing
42.7
Cost of Goods
Current
40.8
ECR
Source: Food
Marketing Inst.,
ECR, 1993.
MRP
Independent demand
Pull/push
Sales forecast based
on past experience
Dependent demand
Push
Requirements based
on current and future
demand
Entire system
Single facility
MRP
Part based
Independent demand
Pull/push
Sales forecast based
on past experience
Single facility
Product based
Dependent demand
Push
Requirements based
on current and future
demand
Entire system
Comparisons of Approaches
EOQ
Push vs.
Pull
Pull/Push
Dependent
vs. Indep.
I
Systemwide
vs. Single
Single
JIT
Pull
Single
MRP
Push
System
DRP
Push
System
End of Section #2
Exam 2 will cover
material to this point
Study guide will be
posted on the Internet
Exam will be approx.
35 multiple choice,
and 8 short answer