How to decide on an effectiveinventorypolicyEstimationof customerdemandReplenishment leadtimeThe number of different products beingconsideredThe length of the planning horizonCosts...>>Servicelevel reguirements...>>11
How to decide on an effective inventory policy • Estimation of customer demand • Replenishment lead time • The number of different products being considered • The length of the planning horizon • Costs .>> • Service level requirements.>> 11
Service cost vs.service level reguirementtrade-offsUsingIT&fastertransporttoreduceinventorywithoutloweringservicelevel100%Servicelevel12
Service cost vs. service level requirement 12 Service level 100% Costs of service Using IT & faster transport to reduce inventory without lowering service level
Cost related to inventory- Order cost:. Cost of the product + Transportation cost一Inventoryholdingcost (carryingcost).Statetaxes,property taxes,and insurance oninventories·Maintenancecostscost·Obsolescence cost·Opportunity costs13
Cost related to inventory – Order cost: • Cost of the product + Transportation cost – Inventory holding cost (carrying cost) •State taxes, property taxes, and insurance on inventories •Maintenance costs •Obsolescence cost •Opportunity costs 13 cost
2.2 Single Stage Inventory ControlSingle supply chain stage·Varietyof techniques-EconomicLotSizeModel-Demand Uncertainty-SinglePeriodModels-MultipleOrderOpportunities-ContinuousReviewPolicy-VariableLeadTimes-PeriodicReviewPolicy-ServiceLevelOptimization14
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 14