311_session_22_economies_of_scale_and_demand_uncertainty

311_session_22_economies_of_scale_and_demand_uncertainty -...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Inventory Systems Economies of Scale and Demand Uncertainty BUAD311 Session 22
Image of page 1

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

View Full Document Right Arrow Icon
2 Previously.. EOQ Model Known demand, multi-periods Newsvendor Model Uncertain demand, but only 1 period The tradeoff between setup cost and inventory holding cost is not relevant. How do we handle uncertain demand and multiple periods?
Image of page 2
3 Objectives Inventory systems Inventory turns/turnover
Image of page 3

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

View Full Document Right Arrow Icon
4 Inventory Level in Real Life First lead time, 1 1 Q Amount used during first lead time Safety stock, SS 2 Order 1 placed Order 2 placed Order 3 placed Shipment 1 received Shipment 2 received Time Inventory on Hand Reorder point Order quantity, Q
Image of page 4
5 Inventory Systems Continuous (perpetual) system: System that keeps track of removals from inventory continuously, thus monitoring current levels of each item. Fixed quantity is ordered when a certain level is reached. Good: (1) Keeps constant count of inventory and (2) fixed order quantity. Bad: (1) Higher record keeping cost; (2) Periodic inventory counting is still required; (3) Time of delivery is random.
Image of page 5

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

View Full Document Right Arrow Icon
6 Continuous System with Positive Lead-time (ROP,Q) policy Order when the inventory reaches the ROP The order size is always Q What is the optimal Q? How do we decide when to order? Should the re-order point be greater than dL?
Image of page 6
7 Safety Stock Safety Stock: Stock that is held in excess of expected demand due to variable demand rate and/or lead time.
Image of page 7

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

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern