Lecture 3 - Deterministic single-item inventory models...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Deterministic single-item inventory models Summary r 4 models considered – EOQ model – EOQ backorders allowed PQ – EPQ – EPQ backorders allowed r Paper presentation: r Each team of 2 students is required to identify a journal article (see list of journals below), and prepare a 15 minute presentation. The team must understand and explain the model being presented to solve the problem addressed. Send me the paper for approval before Feb/03/10 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Key Points from Batching r In deciding the optimal lot size the trade off is between setup (order) cost and holding cost . – At Marco's Pizza, owned by Marco's Franchising LLC of Toledo, Ohio, restaurants are looking to save money on their purchasing process. They are ordering larger amounts less frequently , are working with 2 vendors to lock in transportation costs and are choosing manufacturers that are closer to distribution centers to help reduce freight costs. Marco's expects these and other changes to save the company a total of $2 million a year. For example, scaling down to once-a-week deliveries will save a Marco's franchisee with five stores more than $3,500 per year overall.
Background image of page 2
Setup Time (Cost) Reduction r Set up time has two components – Internal setup : Executed while the machine is operating – External set up : Executed while the machine is stopped. EX: Consider the setup for a lecture: rase the board, bring the screen down, 3 » Erase the board, bring the screen down, turn on laptop, project to screen » Turning on the laptop is the bottleneck r Which operations are external/internal w.r.t. turning on the laptop? EX: Roplast industries (a manufacturer of plastic bags) reduced setup times by 68%, down to 23 mins, and targeting 15 mins. This allowed Roplast run smaller batches. EX: 1000 ton metal stamp Used in making automobile body SMED: Single minute exchange of a die
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Strategies for reducing fixed costs in delivery r Strategies for reducing fixed costs r In production – Standardization / dedicated, Simplification – Set up out of the production line » Service: At Taiwanese restaurants food order is taken from the stomer while customers are waiting for a table. 4 customer while customers are waiting for a table. » Manufacturing: Toyota die change in stamping operation r In delivery – Third party logistics Aggregating multiple products in a single order » Temporal, geographic aggregation – Various truck sizes, difficult to manage
Background image of page 4
Lot Sizing with Multiple Products r Transportation is a significant contributor to the fixed cost per order – Separate orders and deliveries for each product increases the overall cycle inventory – Aggregating orders and deliveries across product families is an effective mechanism to lower cycle inventories r Can also have a single delivery coming from multiple suppliers or a 10-5 single truck delivering to multiple retailers r Aggregating across products, retailers, or suppliers in a single order allows for a reduction in lot size for individual products because
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/25/2010 for the course IE 654 taught by Professor Smith during the Spring '10 term at 카이스트, 한국과학기술원.

Page1 / 47

Lecture 3 - Deterministic single-item inventory models...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online