2. Lead time‚ the time between placement and receipt of the order‚ is known and consistent. 3. Receipt of inventory is instantaneous and complete‚ the inventory order arrives in one batch at one time. 4. Quantity discounts are nor possible. 5. The only variable costs are the set-up and holding costs. 6. Stockouts can be completely avoided if orders are placed at the right times. 6. What is the relationship of the economic order quantity to demand? To the holding cost? To the set-up costs
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Obersport is responsible for fabric and component sourcing for Sport Obermeyer’s entire production in the Far East. The materials are then cut or sewn either in Raymond Tse’s own “Alpine” factories or by independent subcontractors. Sport Obermeyer’s orders represent about 80 percent of Alpine’s annual production volume. + Paragraph – highlight of answers Overview of Relevant Facts + Add paragraph – need results/answers from other group partners Case Answers 1. Forecasting is arguably
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Storing resources Importance of Inventory Control Irregular supply and demand Demand and supply may not be constant over time Inventory can be used to buffer the variability Lower prices may be available for larger orders Extra costs associated with holding more inventory must be balanced against lower purchase price Stockouts may result in lost sales Dissatisfied customers may choose to buy from another supplier 7 Quantity discounts Avoiding
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be deterministic and constant. ◦ The Economic Order Quantity (EOQ) model Probabilistic Inventory models ◦ The demand is not known. Demand characteristics such as mean‚ standard deviation and the distribution of demand may be known. ◦ A fixed order quantity model ◦ A fixed time period model Economic Order Quantity (EOQ) It is an idealized inventory system to calculate the fixed order quantity that minimizes total costs. This optimal order size is called EOQ. Reorder Level Reorder
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CHAPTER 8 Current asset management SOLUTIONS TO PROBLEMS 8-2* (a) Recommendation (i) 0.105 × $800 000 × 1/12 = $7‚000 < $20‚000 No (ii) 0.105 × $800‚000 × 2/12 = $14‚000 < $20‚000 No (iii) 0.105 × $800‚000 ×3/12 = $21‚000 > $20‚000 Yes (iv) 0.105 × $800‚000 × 6/12 = $42‚000 > $20‚000 Yes (v) 0.105 × $800‚000 ×12/12 = $84‚000 > $20‚000 Yes (b) Let y be the break-even yield. With $800‚000 to invest for two months and a two-month holding period‚ we have:
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Component 0.16 0.09 0.01 Reliability 0.84 0.91 0.99 Sys Reliability 0.757 Table C.1 Optimal Inventory for Shoelaces Inventory Economic Order Quantity Model Data Demand rate‚ D 300000 Setup/order cost‚ S 125 Holding cost‚ H 0.1 Unit Price‚ P Results Optimal Order Quantity‚ Q* 27386.13 Maximum Inventory 27386.13 Average Inventory 13693.06 Number of Orders 10.95 Holding cost $1‚369.31 Setup cost $1‚369.31 Unit costs $0.00 Total cost‚
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P T E R 12 INVENTORY CONTROL MODELS LEARNING OBJECTIVES After completing this chapter‚ students will be able to: 1. Understand the importance of inventory control. 2. Use inventory control models to determine how much to order or produce and when to order or produce. 3. Understand inventory models that allow quantity discounts. 4. Understand the use of safety stock with known and unknown stockout costs. 5. Understand the importance of ABC inventory analysis. 6. Use Excel to analyze
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Records: Develop an ABC classification for these 10 items. 2. A particular raw material is available to a company at three different prices‚ depending on the size of the order: The cost to place an order is $40. Annual demand is 3‚000 units. Holding (or carrying) cost is 25 percent of the material price. What is the economic order quantity to buy each time? 3. Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce
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explain how P & G ensure that the regular quantities and quality of goods (inventory) and services are purchased and explain the role of the major national and transnational organizations and agencies which influence international purchasing. In order to explain correctly and accurately‚ we have to do a research on P&G and gain our understanding and realization‚ especially their purchasing function. The essay will be divided into two main parts. The first part includes explain how P &
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Managing Business Process Flows: Ch 6 Supply Chain Management Managing the Supply Chain Key to matching demand with supply Managing materials waiting time Cost and Benefits of inventory Inventory Analysis: Economies of Scale (Ch 6) Palu Gear: Inventory management of a retailer: EOQ + ROP Levers for improvement Copyright © 2013 Pearson Education Inc. publishing as Prentice Hall 1 Key Financial Indicators of Supply Chain Performance Return on Assets Net Present Value … …
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