lecture Slides2_Inventory

lecture Slides2_Inventory - Key Inventory Concepts...

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1 Key Inventory Concepts & Copyright © 2009 Phil Kaminsky Forecasting Intro Phil Kaminsky [email protected] Service Level Optimization What is the service level inventory tradeoff? 1-2 © 2009 Phil Kaminsky 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 390 440 490 540 Inventory Service Lev Lead Time = 2 Lead Time = 4 What Service Level? Sometimes, determined by customers Sometimes, a mix of levels for different products Service levels higher for products with High margins High volume Low variability 1-3 © 2009 Phil Kaminsky Short lead time
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2 Risk Pooling Consider these two systems: Supplier Warehouse One Market One 1-4 © 2009 Phil Kaminsky Market Two Warehouse Two Market Two Supplier Warehouse Market One Risk Pooling For the same service level, which system will require more inventory? Why? For the same total inventory level, which system will have better service? Why? 1-5 © 2009 Phil Kaminsky system will have better service? Why? What are the factors that affect these answers? Risk Pooling Example Compare the two systems: two products maintain 97% service level $60 order cost 1-6 © 2009 Phil Kaminsky $.27 weekly holding cost $1.05 transportation cost per unit in decentralized system, $1.10 in centralized system 1 week lead time
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3 Risk Pooling Example Week 1 2 3 4 5 6 7 8 Prod A, 33 45 37 38 55 30 18 58 1-7 © 2009 Phil Kaminsky Market 1 Prod A, Market 2 46 35 41 40 26 48 18 55 Prod B, Market 1 0 2 3 0 0 1 3 0 Product B, Market 2 2 4 0 0 3 1 0 0 Risk Pooling Example Warehouse Product AVG STD CV Market 1 A 39.3 13.2 .34 Market 2 A 38.6 12.0 . 31
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This note was uploaded on 04/25/2011 for the course IND ENG 153 taught by Professor Kaminsky during the Spring '11 term at Berkeley.

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lecture Slides2_Inventory - Key Inventory Concepts...

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