Lot Sizing Techniques
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The document discusses various lot sizing techniques used to determine optimal batch sizes for production and purchasing. It describes techniques like economic order quantity (EOQ), fixed order quantity (FOQ), lot-for-lot (LFL), periods of supply (POS), period order quantity (POQ), least unit cost (LUC), least total cost (LTC), and part period balancing (PPB). Examples are provided to illustrate how each technique works and the optimal lot size is calculated. The goal of lot sizing is to minimize total inventory costs by balancing setup/ordering costs and carrying costs.
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The document discusses inventory management using analytics for better decision making. It covers key topics like why organizations want to hold inventories like to improve customer service but also don't want to hold too much inventory due to carrying costs. It discusses the tradeoff between inventory and transportation costs. Effective inventory management requires tracking inventory levels, demand forecasting, and estimating costs of holding, ordering and shortages. The nature of inventory can be independent or dependent demand and different systems are used. Key decisions involve how much to order and when to place orders to minimize total costs.
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The document discusses the economic order quantity (EOQ) model, which aims to determine the optimal order quantity that minimizes total inventory costs. It defines key terms like inventory, setup costs, holding costs. The derivation of the EOQ formula is shown, which balances setup and holding costs to find the quantity that minimizes total annual costs. An example application for a company calculating optimal order quantity and reorder point is provided.
Inventory notes
This document provides information on inventory management and control. It discusses economic order quantity (EOQ) models, which aim to determine the optimal order size and timing to minimize total inventory costs. EOQ models balance ordering/setup costs with carrying costs. The document also covers dependent vs independent demand and compares fixed-order quantity (Q) models with fixed-time period (P) models. Q models specify a reorder point and fixed order quantity, while P models use a fixed time between orders and target inventory level.
Log11 uitwerking opdrachten
Uitwerking opdracht TBELOG11 voor studenten TB Hogeschool Rotterdam
Aan deze uitwerkingen kunnen GEEN rechten worden ontleend
C9 inventory management
The document discusses inventory management concepts including the economic order quantity (EOQ) model. It provides the assumptions and equations of the EOQ model, which determines the optimal order quantity by minimizing total costs of ordering and holding inventory. It also discusses other inventory models like production order quantity and quantity discounts, as well as inventory classifications like ABC analysis.
C9 inventory management
The document discusses inventory management concepts including the economic order quantity (EOQ) model. It provides the assumptions and equations of the EOQ model, which determines the optimal order quantity by minimizing total costs of ordering and holding inventory. It also discusses other inventory models like production order quantity and quantity discounts, as well as inventory classifications like ABC analysis.
Brunswick motors, inc
1. Phil Harris, the Production Control Manager at Brunswick Motors, wants to illustrate time-phased requirements planning for scheduling engine assembly operations. He prepares a master schedule for the Model 1000 engine over the next 12 weeks.
2. Phil considers requirements for two components, the gear box and input shaft. The gear box requires 2 weeks to produce and the input shaft requires 3 weeks. Phil plans to use MRP worksheets and assumes 17 gear boxes and 40 input shafts are on hand initially.
3. Calculating schedules using lot-for-lot and least total cost lot sizing, Phil finds using least total cost results in lower total costs of $864 versus $1049 using lot-for-lot
BRUSNSWICK MOTORS, INC
1. Phil Harris, the Production Control Manager at Brunswick Motors, wants to illustrate time-phased requirements planning using an example with the company's Model 1000 engine. He prepares a master schedule for the engine over 12 weeks.
2. Phil considers two components for the engine, the gear box and input shaft. He includes their manufacturing lead times and product structure. The gear box takes 2 weeks to produce and the input shaft takes 3 weeks.
3. Phil plans to use MRP worksheets and make assumptions about starting inventory levels and scheduled deliveries for the gear box and input shaft. He will calculate net requirements and planned order releases using lot-for-lot ordering.
Brunswick motors, inc
1. Phil Harris, the Production Control Manager at Brunswick Motors, wants to illustrate time-phased requirements planning using an example with the company's Model 1000 engine. He prepares a master schedule for the engine over 12 weeks.
2. Phil considers two components for the engine, the gear box and input shaft. He includes their manufacturing lead times and product structure. The gear box takes 2 weeks to produce and the input shaft takes 3 weeks.
3. Phil plans to use MRP worksheets and make assumptions about starting inventory levels and scheduled deliveries for the gear box and input shaft. He will calculate net requirements and planned order releases using lot-for-lot ordering.
Inventory management
The document discusses inventory management concepts including the reasons for holding inventory, types of inventory, costs of inventory, and inventory control systems. It describes the economic order quantity (EOQ) model which aims to minimize total inventory costs by balancing ordering and holding costs. The EOQ model assumes constant demand, lead times, and avoids stockouts. ABC analysis prioritizes inventory items based on their value to focus management efforts on the most important items. Cycle counting helps maintain accurate inventory records by regularly counting samples of inventory.
Lession - 1(Inventory Management).pptx
This document discusses inventory management. It defines inventory and explains its purpose is to meet demand while minimizing costs. There are different types of inventories like raw materials, work-in-progress, and finished goods. Inventory has carrying costs, ordering costs, and shortage costs. The economic order quantity (EOQ) model is used to determine the optimal order size to minimize total costs. Inventory is also classified using the ABC analysis where items are ranked by their annual consumption value. Class A items with the highest value receive the tightest controls while Class C items receive the simplest controls.
Eoq model
This document discusses the economic order quantity (EOQ) model. The EOQ model determines the optimal order quantity that minimizes total inventory costs by balancing order processing costs and inventory holding costs. It assumes known demand, lead times, and costs. The formula for economic order quantity is derived and explained. An example application to a coffee maker order at SaveMart is provided to illustrate calculating optimal order quantity and reorder point using EOQ equations. Factors that could impact the EOQ are also listed.
Managing Inventory In SC Lect#12 in.pptx
This document discusses inventory management in supply chains. It begins by defining inventory as materials awaiting future sale or use. It then describes the different types of inventory held at various stages of the supply chain, from raw materials to finished goods.
The document outlines the costs associated with holding inventory, including purchase, ordering, and holding costs. It introduces concepts like economic order quantity (EOQ) and economic production quantity (EPQ) models to determine optimal lot sizes that minimize total costs.
The role of cycle inventory is explained, which allows different supply chain stages to purchase in larger lots than customer demand to take advantage of economies of scale. However, this increases total inventory levels and costs across the supply chain. Finally, the
Managing Inventory In SC Lect#12 in.pptx
This document discusses inventory management in supply chains. It begins by defining inventory as materials awaiting future sale or use. It then describes the different types of inventory held at various stages of the supply chain, from raw materials to finished goods.
The document outlines the costs associated with holding inventory, including purchase, ordering, and holding costs. It introduces concepts like economic order quantity (EOQ) and economic production quantity (EPQ) models to determine optimal lot sizes that minimize total costs.
The role of cycle inventory is explained, which allows different supply chain stages to purchase in larger lots than customer demand to take advantage of economies of scale. However, this increases total inventory levels and costs across the supply chain. Finally, the
Inventory management
This document discusses inventory management concepts including independent and dependent demand, types of inventories, functions of inventory, objectives and effective inventory management. It also covers inventory models like the single period model and multiple period models including the fixed order quantity and fixed time period models. Key terms discussed include lead time, holding costs, ordering costs, shortage costs. The ABC classification system for inventory is also explained.
Inventory management ppt @ bec doms
The document discusses various inventory management models and concepts. It begins with an overview of inventory types and functions. It then covers ABC analysis for classifying inventory, cycle counting to ensure accuracy, and models for determining order quantities like economic order quantity, production order quantity, and probabilistic models. The key models provide ways to determine how much and when to order inventory to minimize total costs based on factors like demand, ordering costs, and holding costs.
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Lot Sizing Techniques
- 1. Lot Sizing Techniques To determine batch size for purchased or produced items Anand Subramaniam
- 4. Lot Sizing & Safety Stock Lot Size Item quantity that is made or purchased. Safety Stock Quantity of stock planned to be in inventory to protect against fluctuations in demand and / or supply
- 7. Example - FOQ 500 500 Planned Order Releases 500 500 Planned Receipts 150 265 450 570 200 460 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 500 Order Quantity
- 9. Example - EOQ Avg. Demand = 152.5/wk D = 152.5 ´ 52 wks/yr = 7,930 EOQ = = = 650 50 . 1 25 . 0 ) 930 , 7 )( 10 ( 2 650 650 Planned Order Releases 650 650 Planned Receipts 450 565 100 220 350 610 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 EOQ Order Quantity Setup cost = $10/order : Cost of item = $1.50/unit : Inventory carrying cost = 25% /year
- 11. Example – LFL 115 185 120 130 260 120 Planned Order Releases 115 185 120 130 260 120 Planned Receipts 80 80 80 80 80 80 80 80 80 Projected Available 160 130 Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 LFL Order Quantity
- 13. Example - POS 3 Weeks 420 510 Planned Order Releases 420 510 Planned Receipts 80 195 380 80 210 470 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 POS Order Quantity
- 15. Example - POQ EOQ = 650 (Slide # 13) 630 Planned Order Releases 630 Planned Receipts ? ? 80 200 330 590 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 Avg Week Use = 152.5 : POQ = 650/152.5 = 4.26 » 4 POQ Order Quantity
- 17. Example - LUC COQ *= Carrying cost - (260)(0.007212)(1 wk) = 1.875 : (185)(0.007212)(4 wks) = 5.337 : (115)(0.007212)(5 wks) = 4.147 Inventory carrying cost = (25%)($1.50/52) = $0.007212/unit/wk 0.028 25.83 15.83 4.15 10 5 115 930 8 115 0.027 21.68 11.68 5.34 10 4 185 815 7 185 0.026 16.35 6.35 2.60 10 3 120 630 6 120 0.027 13.75 3.75 1.88 10 2 130 510 5 130 0.031 11.88 1.88 1.88 10 1 260 380 4 260 0.083 10 0.00 0.00 10 0 0 120 3 120 Unit Cost Total Cost Cum Cost This Period (*) Order Cost Week Carried Excess Inv Cum Order Qty In Period Future Reqmnt Carrying Cost
- 18. Example - LUC LUC = COQ* = 630 630 Planned Order Releases 630 Planned Receipts ? ? 80 200 330 590 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 Order Quantity
- 20. Example - LTC 25.83 15.83 4.15 10 5 115 930 8 115 21.68 11.68 5.34 10 4 185 815 7 185 16.35 6.35 2.60 10 3 120 630 6 120 13.75 3.75 1.88 10 2 130 510 5 130 11.88 1.88 1.88 10 1 260 380 4 260 10 0.00 0.00 10 0 0 120 3 120 Total Cost Cum Cost This Period Order Cost Week Carried Excess Inv Cum Order Qty In Period Future Reqmnt Carrying Cost
- 21. Example - LTC LTC = 815 ? 815 Planned Order Releases ? 815 Planned Receipts ? 80 265 385 515 775 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 Order Quantity
- 23. Example - PPB 2195 575 5 115 930 8 115 1620 740 4 185 815 7 185 880 360 3 120 630 6 120 520 260 2 130 510 5 130 260 260 1 260 380 4 260 0 0 0 0 120 3 120 Cum Cost This Period Week Carried Excess Inv Cum Order Qty In Period Future Reqmnt Part Period
- 24. Example - PPB PPB = 815 ? 815 Planned Order Releases ? 815 Planned Receipts ? 80 265 385 515 775 80 240 370 Projected Available Scheduled Receipts 115 185 120 130 260 120 160 130 Gross Requirement 8 7 6 5 4 3 2 1 Lead Time = 2 weeks Week Safety Stock = 80 Order Quantity