Introduction Other Farm 1为 7%) Inventory model $174.6 $114.6 billion billion Retail discussed here are most 30附 Manufacturing 29% $472.5 billion $454.9 billion applicable to Wholesale 23为 manufacturing, $353.6 billion wholesale,and retail Total investment =$1,570.2 billion sectors,composing 82 Survey of Current Business (July 2007) of the total. Fig.4-1 Breakdown of the Total Investment in Inventories in the U.S.Economy (2007)
Introduction Fig. 4-1 Breakdown of the Total Investment in Inventories in the U.S. Economy (2007) Inventory model discussed here are most applicable to manufacturing, wholesale, and retail sectors, composing 82 % of the total
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
Types of Inventories A natural classification is by value added from manufacturing: Raw materials-Resources required in the production or processing activity of the firm. Components-Raw materials or subassemblies that will later be included into a final product. Work-in-process (WIP)-the inventory either waiting in the system for processing or being processed. .Finished good-also known as end items-the final products
Types of Inventories A natural classification is by value added from manufacturing: • Raw materials-Resources required in the production or processing activity of the firm. • Components-Raw materials or subassemblies that will later be included into a final product. • Work-in-process (WIP )-the inventory either waiting in the system for processing or being processed. •Finished good-also known as end items-the final products
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
Why Hold Inventories .For economies of scale-It may be economical to produce a relatively large number of items in each production run and store them for future use. Coping with Uncertainties VUncertainty in demand; VUncertainty in lead time vUncertainty in supply
Why Hold Inventories •For economies of scale-It may be economical to produce a relatively large number of items in each production run and store them for future use. •Coping with Uncertainties Uncertainty in demand; Uncertainty in lead time Uncertainty in supply