Lecture 5Risk Pooling(Centralized system)王长琼武汉理工大学2017.5
Lecture 5 Risk Pooling (Centralized system) 1 王长琼 武汉理工大学 2017,5
ObjectivesUnderstandinginventoryina supplychainWhyinventoryisimportant?How to manage it?SingleStageInventoryControl- Economic Lot Size Model-Demand Uncertainty/MultipleOrderOpportunitiesRisk Pooling
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 Multiple Order Opportunities Risk Pooling 2
2.3RiskPooling· Aggregated forecast is more accurateDemand variability is reduced if one aggregatesdemand across locations.- High demand from one customer may be offset bylow demand from another.Reduction invariabilityallowsadecreaseinsafetystock and therefore reduces average inventory3
2.3 Risk Pooling • Aggregated forecast is more accurate • Demand variability is reduced if one aggregates demand across locations. - High demand from one customer may be offset by low demand from another. • Reduction in variability allows a decrease in safety stock and therefore reduces average inventory. 3
Demand Variation MeasuresStandard deviation, measures how muchdemand tends to vary around the average-anabsolute measureofthevariability Coefficient of variation, cv = /μ-a relative measure of the variability, relative to theaverage demand
Demand Variation Measures • Standard deviation, measures how much demand tends to vary around the average – an absolute measure of the variability • Coefficient of variation, cv = / – a relative measure of the variability, relative to the average demand 4
AcME:RiskPoolingCaseElectronic equipment manufacturer and distributor2 warehouses for distribution in Massachusetts andNew Jersey (partitioning the northeast market intotwo regions)Each retailer (Customer) is assigned a warehouseWarehouses receive material from ChicagoCurrent rule:97%servicelevel(3%probabilityofstock-out5
ACME: Risk Pooling Case • Electronic equipment manufacturer and distributor • 2 warehouses for distribution in Massachusetts and New Jersey (partitioning the northeast market into two regions) • Each retailer (Customer) is assigned a warehouse • Warehouses receive material from Chicago • Current rule: 97 % service level (3 % probability of stock-out) 5