Tyran - point was 180 drums and the day when the strategy...

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Tyran Tyran operates in a seasonal market with fluctuating inventory demands that repeat in cycles. The order point and order quantity were continuously updated to respond to inventory demand. When the inventory demand was low during the beginning and end of the cycles, the order point and order quantity were set low. The gradual increase of demand required inventory to accumulate in the warehouse. This prepared the region for the part of the cycle when the production capacity could not meet the demand. Each cycle lasted on average 360 days and transportation was set to truck during the low inventory demand and mail during the high inventory demand. Transportation remained set as mail during the end of the simulation in order to expedite inventory out of the warehouse. The order point was calculated based on the strategy used for the duration of the cycle. On day 1140, estimated demand was 13.85 drums. If the desired inventory on hand was set at 20 drums and orders were expected to arrive every other day, a truck shipment was selected to minimize costs. The required order
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Unformatted text preview: point was 180 drums and the day when the strategy changed was on 1110. During the high peaks of the cycle, the desired inventory on hand was 90 drums. With a two day lead time and one day for mail delivery, the order point was calculated at 270 drums. This change of strategy took place 60 days prior to the day in question to accommodate the limited factory capacity. Calculation s Actual Deman d Estimated Demand Min Max Desired Inventor y on Hand Days lead time at 40 Capacit y Truc k Lead Time Mail Lea d Tim e Require d Order Point Day to Change Orders Numbe r of Days 1140 Day 12.30 13.85 1.00 36.00 20.00 2.00 7.00 180.00 1110.00 30.00 1200 Day 28.85 36.49 4.00 94.00 45.00 2.00 1.00 135.00 1160.00 40.00 1260 Day 58.42 62.12 21.00 127.00 80.00 2.00 1.00 240.00 1210.00 50.00 1320 Day 69.57 67.35 28.00 124.00 90.00 2.00 1.00 270.00 1260.00 60.00 1380 Day 49.60 43.40 16.00 105.00 55.00 2.00 1.00 165.00 1340.00 40.00 1460 Day 17.76 14.59 0.00 63.00 20.00 1.00 1.00 40.00 1410.00 30.00...
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