POM11-14-supply_chain_and_inventory

POM11-14-supply_chain_and_inventory - Supply Chain...

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Supply Chain Management Supply Chain : the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as Sometimes referred to as value chains value chains
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Functions and Activities Forecasting Purchasing Inventory management Information management Quality assurance Scheduling Production and delivery Customer service
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Global Supply Chains Increasing more complex Language Culture Currency fluctuations Political Transportation costs Local capabilities Finance and economics Environmental
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Global Supply Chains Increasing more complex Language Culture Currency fluctuations Political Transportation costs Local capabilities Finance and economics Environmental
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Choosing suppliers Evaluating sources of supply Supplier audits Supplier certification Supplier relationships Supplier partnerships Suppliers
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Inventory Management Functions of Inventory To meet anticipated demand To smooth production requirements To decouple operations To protect against stock-outs
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Functions of Inventory (Cont’d) To take advantage of order cycles To help hedge against price increases To permit operations To take advantage of quantity discounts
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Lead time : time interval between ordering and receiving the order Holding (carrying) costs : cost to carry an item in inventory for a length of time, usually a year Ordering costs : costs of ordering and receiving inventory Shortage costs : costs when demand exceeds supply Key Inventory Terms
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Economic order quantity (EOQ) model The order size that minimizes total annual cost Economic production model Quantity discount model Economic Order Quantity Models
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The Inventory Cycle Figure 12.2 Profile of Inventory Level Over Time Quantity on hand Q Receive order Place order Receive order Place order Receive order Lead time Reorder point Usage rate Time
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Total Cost Annual carrying cost Annual ordering cost Total cost = + TC = Q 2 H D Q S +
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POM11-14-supply_chain_and_inventory - Supply Chain...

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