MAW - Dr. Mark Wilkinson Senior Industrial Engineer and...

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Unformatted text preview: Dr. Mark Wilkinson Senior Industrial Engineer and Intel Technologist Intel Corporation April 28, 2008 Supply Chain Analysis Tools MS&E 262 Supply Chain Management Hausman and Wilkinson 2 My Role in Intels Supply Chain Hausman and Wilkinson 3 Inventory/Service Trade-off Curve Poor Low High Good Service Inventory Analytical tools help lower the curve! Motivation Hausman and Wilkinson 4 Outline Analytical Tools EOQ Newsvendor Lot Size Reorder (Q,R) Model Periodic Review (T,S) Model Random Lead Times Supply Chain Improvements Risk Pooling/Consolidation Example T/S Policy and Lead Time Reduction Postponement Example Hausman and Wilkinson 5 Standard Inventory Models Demand: Known Supply: Known Demand: Unknown Supply: Known Demand: Unknown Supply: Unknown Trade-off: Ordering Cost Holding Cost Penalty Costs: None Ordering vs. Holding Ordering vs. Holding Underage/Overage Underage/Overage Case I Case II Case III Hausman and Wilkinson 6 Standard Inventory Models Economic Order Quantity (EOQ) Deterministic; determine order quantity Newsvendor Captures demand variability; determine one-time-shot quantity Lot Size-Reorder Model Includes variability in an on-going setting Determine order quantity (Q) when an inventory level (R) is met Periodic Review Model Includes variability in an on-going setting Determine order-up-to level (S) when ordering every T time units Case I Case II Case II/III Case II/III Hausman and Wilkinson 7 Economic Order Quantity Model How much to order/produce? Fixed order cost of $ K Inventory holding cost of $ h = $ Ic Shortages prohibited Deterministic (constant) demand rate per year, D T Q Time, t Slope = -D (T = Q/D) Inventory Level Analytical Tools Hausman and Wilkinson 8 EOQ Model - Derivation Total = G(Q)-cD Holding = IcQ/2 Setup = KD/Q Q Q* Annual Holding + Setup Cost Ic KD Q 2 * = G(Q) = cD + KD / Q + IcQ /2 Purchasing Setup Holding Analytical Tools Hausman and Wilkinson 9 EOQ Model Sensitivities/Shortcomings 40 20 02 rule 40 % error in an input parameter results in 20 % error in Q The result is a 2 % increase in the costs, G(Q) Shortcomings of EOQ Model? Analytical Tools Cost function is relatively insensitive to errors in Q Zero lead time (easily extended to fixed lead time) Infinite production rate (finite production rate, P , if P > D ) No shortages allowed (easily extendable) Constant, deterministic demand rate Hausman and Wilkinson 10 +ewsvendor Model How much to order/produce? Underage cost/unit (if you run out) c u Overage cost/unit (if you have leftovers) c o Likelihood f(d) Demand, d Mean Hausman and Wilkinson 11 Shortcomings of Newsvendor Model?...
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This note was uploaded on 06/16/2010 for the course MS&E 262 taught by Professor Warrenhausman during the Spring '08 term at Stanford.

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MAW - Dr. Mark Wilkinson Senior Industrial Engineer and...

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