Lecture 3Single Stage InventoryControlWang BhanggiongWHUTApril.2017
Lecture 3 Single Stage Inventory Control 1 Wang Zhangqiong WHUT April, 2017
ObjectivesUnderstandinginventoryina supplychainWhyinventoryisimportant?How to manage it?SingleStageInventoryControl-EconomicLotSizeModel-DemandUncertainty,safestockMultipleOrderOpportunities:RiskPooling(Centralizedsystem)
Objectives • Understanding inventory in a supply chain Why inventory is important? How to manage it? • Single Stage Inventory Control - Economic Lot Size Model - Demand Uncertainty, safe stock • Multiple Order Opportunities: • Risk Pooling (Centralized system) 2
2.2 Single Stage Inventory ControlSinglesupplychainstage·Variety of techniques-EconomicLotSizeModel-Demand Uncertainty-SinglePeriodModels- Multiple Order Opportunities-ContinuousReviewPolicy-VariableLeadTimes-PeriodicReviewPolicy-ServiceLevelOptimization3
2.2 Single Stage Inventory Control • Single supply chain stage • Variety of techniques – Economic Lot Size Model – Demand Uncertainty – Single Period Models – Multiple Order Opportunities – Continuous Review Policy – Variable Lead Times – Periodic Review Policy – Service Level Optimization 3
2.2.1. Economic Lot Size ModelEconomicOrderQuantity(EOQOrdersizeAverageosTimeFiG. 2-3: Inventory level as a function of time
2.2.1. Economic Lot Size Model Economic Order Quantity(EOQ) FIG. 2-3: Inventory level as a function of time 4
Assumptions D items per day: Constant demand rateQitems per order: Order quantities are fixedK, fixed setup cost, incurred every time the warehouseplaces an order. h, inventory carrying cost accrued per unit held ininventory per day that the unit is held. Lead time = 0(the time that elapses betweenthe placement of anorder and its receipt)Initial inventory = 0Planning horizon is long (infinite),5
Assumptions • D items per day: Constant demand rate • Q items per order: Order quantities are fixed. • K, fixed setup cost, incurred every time the warehouse places an order. • h, inventory carrying cost accrued per unit held in inventory per day that the unit is held. • Lead time = 0 (the time that elapses between the placement of an order and its receipt) • Initial inventory = 0 • Planning horizon is long (infinite). 5