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Test 3 cheat sheet - Chapter 11 inventory...

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Chapter 11 – inventory management-Independent Demand ( Picture of Ishikawa Akira) Inventory Management began with Ford Harris to answer the question “How many units should be made in one batch”? Ford Harris created the classic economic order quantity formula (EOQ) answers the question how much and when? Formula CYCLE = Q/D YEARS The Japanese used Total quality control and Just in Time 2 main features = Kanaban Cards = cards that tell upstream departments that and item has been used and it is ok to make another # of Kanbans needed = [(lead time x average usage rate) x ( 1+ pheta)]/ kanban card capacity. and eliminate variance Collaboration = reduces the need for MRP or JIT . Stop working independently and start working with suppliers and others Wal-Mart recognized that Proctor Gamble’s Pampers division management probably understood the demand for diapers better than it did. From this sprange a group called “ Collaborative Planning Forecasting and Replenishment Committee (CPFR) with the mission to improve partnership between retailer and suppliers trough co-managed processes and shared information Total Cost = inventory cost + setup cost Production Lot scheduling model = production minus demand rate Most businesses do not exist in an environment without uncertainty, as a result most firms find it necessary to carry safety stock to ensure product availability.
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