Production and Operation Managements Inventory Control Subject to Known Demand Prof.JIANG Zhibin Dr.GENG Na Department of Industrial Engineering Management Shanghai Jiao Tong University
Production and Operation Managements Prof. JIANG Zhibin Dr. GENG Na Department of Industrial Engineering & Management Shanghai Jiao Tong University Inventory Control Subject to Known Demand
Contents .Introduction .Types of Inventories .Motivation for Holding Inventories; .Characteristics of Inventory System; Relevant Costs; .The EOQ Model: EOQ Model with Finite Production Rate Quantity Discount Models .Resource-constrained multiple product system .EOQ models for production planning .Power-of-two policies
Contents •Introduction •Types of Inventories •Motivation for Holding Inventories; •Characteristics of Inventory System; •Relevant Costs; •The EOQ Model; •EOQ Model with Finite Production Rate •Quantity Discount Models •Resource-constrained multiple product system •EOQ models for production planning •Power-of-two policies
Resource-constrained multiple product system When the EOQ model is used in companies stocking many different items,although we can obtain the optimal order quantities separately for each of different items,there could exist constraints (such as stock space,financial budget)that would make the resulting solution infeasible
Resource-constrained multiple product system When the EOQ model is used in companies stocking many different items, although we can obtain the optimal order quantities separately for each of different items, there could exist constraints (such as stock space, financial budget) that would make the resulting solution infeasible
Resource-constrained multiple product system Example 4.5:three items are produced in a small fabrication shop =0.25 The shop never have more than $30,000 invested in the inventory of these items at one time What lot sizes should the shop be producing so that they do not exceed the budget? 1 2 3 Demand rate 1,850 1,150 800 Variable cost 50 350 85 Setup cost 100 150 50
Resource-constrained multiple product system Example 4.5: three items are produced in a small fabrication shop. I=0.25 The shop never have more than $30,000 invested in the inventory of these items at one time What lot sizes should the shop be producing so that they do not exceed the budget? 12 3 Demand rate 1,850 1,150 800 Variable cost 50 350 85 Setup cost 100 150 50
Resource-constrained multiple product system First check whether the budget is feasible when using EOQ values of these three items E00= 2*100*1,850 =172, 0.25*50 E00,= 2*150*1,150 =63, 0.25*350 E00= 2*50*800 =61. 0.25*85 If the EOQ value is used,the maximum investment in inventory would be72*50+63*350+61*85=$35835>$30000 We therefore need to reduce these lot sizes.How to do?
Resource-constrained multiple product system First check whether the budget is feasible when using EOQ values of these three items If the EOQ value is used, the maximum investment in inventory would be 72*50+63*350+61*85=$35835>$30000 We therefore need to reduce these lot sizes. How to do? 1 2 3 2*100*1,850 172, 0.25*50 2*150*1,150 63, 0.25*350 2*50*800 61. 0.25*85 EOQ EOQ EOQ