Inventory

Inventory - DS 412 Operations Management Inventory...

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DS 412 Operations Management Inventory Management Part I
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Outline Part I Define the term inventory Inventory supply chain Reasons for holding inventories Types of inventory. Models for inventory management of independent demand: Basic economic order quantity (EOQ) model The quantity discount model. The economic production quantity (EPQ) model Part II Describe reorder point models Describe situations in which the single-period model would
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Types of Inventory Inventory is a stock of goods. Types of inventory: Manufacturing: Raw materials and component parts that form the input to the production process. Work in Process (WIP) are partially completed sub- assemblies that will be part of the finished good. Finished goods inventory are the completed product. Service: Retail stock that has been purchased and is available for sale. Supplies: Miscellaneous items – pencils, paper, printing cartridges, nuts,
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The Inventory Supply Chain Suppliers Manufacturer Parts &Raw Materials WIP Finished Goods Parts &Raw Materials Distributors Retailers Stock Stock Suppliers fill in orders from manufacturers. Manufacturers produce the finished goods bases on a production master schedule months in advance. Distributors form a network of warehouses ready to meet orders from retailers. Retailers meet the uncertain end demand from customers Customer
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Why hold inventory Meet anticipated demand and achieve satisfactory levels of customer service. Protect against stock-outs. Take advantage of order cycles. Price increases / Quantity discounts. Smooth production requirements. Decouple sequential operations of the system.
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Independent vs Dependent Demand A is the end product Independent Demand A B(4) C(2) D(2) E(1) D(3) F(2) Items B,C,D,E, and F are components of A. Dependent Demand Independent demand refers to finished goods demand . It is uncertain. Dependent demand refers to component parts of finished goods. Inventory : a stock of goods
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Inventory Management Dependent Demand Material Requirements Planning (MRP) systems. Push system for planning orders for parts and subassemblies It is a top- down computerized ordering system . Just in Time (JIT) systems.
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Inventory - DS 412 Operations Management Inventory...

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