JIAOTONG UNIVERSITY 96 Supply Chain Management Lecture 9 Cycle Inventory Instructor(s) Prof.Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering SEIEE AU406
Supply Chain Management Instructor(s) SEIEE AU406 + - Cycle Inventory Prof. Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering Lecture 9
Outline Role of Cycle Inventory in a Supply Chain Economies of Scale to Exploit Fixed Costs Economies of Scale to Exploit Quantity Discounts Why Quantity Discounts? Managing Multi-Echelon Cycle Inventory SEIEE AU406 2
+ - SEIEE AU406 Outline Role of Cycle Inventory in a Supply Chain Economies of Scale to Exploit Fixed Costs Economies of Scale to Exploit Quantity Discounts Why Quantity Discounts? Managing Multi-Echelon Cycle Inventory 2
Role of Inventory in the Supply Chain Improve Matching of Supply and Demand Improved Forecasting Reduce Material Flow Time Reduce Waiting Time Reduce Buffer Inventory Supply/Demand Seasonal Economies of Scale Variability Variability 个 Cycle Inventory Safety Inventory Seasonal Inventory SEIEE AU406 3
+ - SEIEE AU406 Role of Inventory in the Supply Chain Improve Matching of Supply and Demand Improved Forecasting Reduce Material Flow Time Reduce Waiting Time Reduce Buffer Inventory Economies of Scale Supply / Demand Variability Seasonal Variability Cycle Inventory Safety Inventory Figure Error! No text of Seasonal Inventory 3
Role of Cycle Inventory in a Supply Chain Lot,or batch size:quantity that a supply chain stage either produces or orders at a given time For example,a computer store that sells an average of 4 printers a day The store manager,however,orders 80 printers from the manufacturer each time he places an order It takes an average of 20 days before the store sells the entire lot and purchases a replenishment lot. The computer store holds an inventory of printers because the manager purchases a lot size larger than the store's daily sales. SEIEE AU406 4
+ - SEIEE AU406 Role of Cycle Inventory in a Supply Chain Lot, or batch size: quantity that a supply chain stage either produces or orders at a given time For example, a computer store that sells an average of 4 printers a day The store manager, however, orders 80 printers from the manufacturer each time he places an order It takes an average of 20 days before the store sells the entire lot and purchases a replenishment lot. The computer store holds an inventory of printers because the manager purchases a lot size larger than the store’s daily sales. 4
Role of Cycle Inventory in a Supply Chain Cycle inventory:average inventory that builds up in the supply chain because a supply chain stage either produces or purchases in lots that are larger than those demanded by the customer Q lot or batch size of an order D demand per unit time Inventory profile:plot of the inventory level over time 图 Cycle inventory Q/2(depends directly on lot size) Average flow time Avg inventory Avg flow rate Average flow time from cycle inventory Q/(2D) Warning:This model is useful when the demand is stable SEIEE AU406 10-5
+ - SEIEE AU406 Cycle inventory: average inventory that builds up in the supply chain because a supply chain stage either produces or purchases in lots that are larger than those demanded by the customer Q = lot or batch size of an order D = demand per unit time Inventory profile: plot of the inventory level over time Cycle inventory = Q/2 (depends directly on lot size) Average flow time = Avg inventory / Avg flow rate Average flow time from cycle inventory = Q/(2D) 10-5 Warning: This model is useful when the demand is stable Role of Cycle Inventory in a Supply Chain