Bài giảng Operations Management - Chapter 13: Inventory Management

Inventory ManagementMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.You should be able to:Define the term inventory, list the major reasons for holding inventories, and list the main requirements for effective inventory managementDiscuss the nature and importance of service inventoriesExplain periodic and perpetual review systemsExplain the objectives of inventory managementDescribe the A-B-C approach and explain how it is usefulDescribe the basic EOQ model and its assumptions and solve typical problemsDescribe the economic production quantity model and solve typical problemsDescribe the quantity discount model and solve typical problemsDescribe reorder point models and solve typical problemsDescribe situations in which the single-period model would be appropriate, and solve typical problems13-*Student SlidesInventoryA stock or store of goodsIndependent demand itemsItems that are ready to be sold or usedInventories are a vital part of business: (1) necessary for operations and (2) contribute to customer satisfactionA “typical” firm has roughly 30% of its current assets and as much as 90% of its working capital invested in inventory13-*Student SlidesManagement has two basic functions concerning inventory:Establish a system for tracking items in inventoryMake decisions aboutWhen to orderHow much to orderStudent Slides13-*Periodic SystemPhysical count of items in inventory made at periodic intervalsPerpetual Inventory SystemSystem that keeps track of removals from inventory continuously, thus monitoring current levels of each itemAn order is placed when inventory drops to a predetermined minimum levelTwo-bin systemTwo containers of inventory; reorder when the first is emptyStudent Slides13-*Purchase costThe amount paid to buy the inventoryHolding (carrying) costsCost to carry an item in inventory for a length of time, usually a yearOrdering costsCosts of ordering and receiving inventorySetup costsThe costs involved in preparing equipment for a jobAnalogous to ordering costsShortage costsCosts resulting when demand exceeds the supply of inventory; often unrealized profit per unit13-*Student SlidesUsing calculus, we take the derivative of the total cost function and set the derivative (slope) equal to zero and solve for Q.The total cost curve reaches its minimum where the carrying and ordering costs are equal.13-*Student SlidesReorder pointWhen the quantity on hand of an item drops to this amount, the item is reordered.Determinants of the reorder pointThe rate of demandThe lead timeThe extent of demand and/or lead time variabilityThe degree of stockout risk acceptable to managementStudent Slides13-*Student Slides13-*Demand or lead time uncertainty creates the possibility that demand will be greater than available supplyTo reduce the likelihood of a stockout, it becomes necessary to carry safety stockSafety stockStock that is held in excess of expected demand due to variable demand and/or lead timeStudent Slides13-*The amount of safety stock that is appropriate for a given situation depends upon:The average demand rate and average lead timeDemand and lead time variabilityThe desired service levelStudent Slides13-*Note: If only demand is variable, then13-*Student SlidesFixed-order-interval (FOI) modelOrders are placed at fixed time intervalsReasons for using the FOI modelSupplier’s policy may encourage its useGrouping orders from the same supplier can produce savings in shipping costsSome circumstances do not lend themselves to continuously monitoring inventory positionStudent Slides13-*Student Slides13-*Improving inventory processes can offer significant cost reduction and customer satisfaction benefitsAreas that may lead to improvement:Record keepingRecords and data must be accurate and up-to-dateVariation reductionLead variationForecast errorsLean operationsSupply chain managementStudent Slides13-*