Class12

Class12 - Operations Management Class 1: Class 2: Class 3...

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1 Operations Management Class 1: Introduction to OM and Process Analysis Class 2: Process Analysis Class 3 and 4: Process Analysis Continued Class 5 and 6: Variability in processes Class 7: Forecasting Class 8: Quality Management, JIT, MRP, and ERP Class 9: Project Management Class 10: Midterm Review Class 11: Scheduling Class 12: Inventory Management: EOQ Model
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2 Learning Objectives Introduce the basics of inventory management Understand the analytical approaches used in modeling and making inventory decisions Describe the basic economic order quantity model (EOQ)
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3 What is inventory? Why is inventory management important? What are the reasons for holding or not holding inventory? Where should you hold inventory? How much inventory to hold? When should you order inventory? Basics of inventory management
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4 What is Inventory? downstream upstream Inventory is everywhere in a typical supply chain! Definition: The stock of any item or resource used in an organization
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5 Why Is Inventory Important?
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6 The ratio of inventories to total current assets Dell 3.5%-4% Hewlett-Packard 11.5%-15.6% Source: http://finance.yahoo.com
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7 Wal-Mart (Billion $) Boeing (Billion $) Toyota (Billion $) Dell (Billion $) Cash & Short-term  investments 7.3 3.7 30.3 10.9 Account receivables 3.9 6.6 63.3 4.7 Inventories 34.5 70.6% 15.6 60% 14.9 13% 0.87 4.3% Other current assets 3.3 - 6.4 3.7 Total current assets 48.9 100% 26 100% 115 100% 20.2 100% Others assets 114.6 27.8 180.9 6.3 Total assets 163.5 53.8 295.9 26.5 2009 Fiscal Year Cross Industry Comparison Source: http://finance.yahoo.com
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8 Importance of Inventory Management ... by 1990 Wal-Mart was already winning an important technological war that other discounters did not seem to know was on. “Wal-Mart has the most advanced inventory technology in the business and they have invested billions in it”. ( New York Times, Nov. 95 ) K-mart increased its inventories to $8.3 billions in the third quarter of 2001 with an expectation of more shoppers. “But higher sales never materialized, leading to a disastrous holiday selling season.” Kmart filed for bankruptcy on Jan. 22.
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Class12 - Operations Management Class 1: Class 2: Class 3...

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