lect8 - Inventory Management Extensions to EOQ Chris...

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Chris Caplice ESD.260/15.770/1.260 Logistics Systems Oct 2006 Inventory Management Extensions to EOQ
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© Chris Caplice, MIT 2 MIT Center for Transportation & Logistics – ESD.260 Agenda Review of Basic EOQ Non-instantaneous Leadtime Finite Replenishment (EPQ) Multiple Locations Discounting
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© Chris Caplice, MIT 3 MIT Center for Transportation & Logistics – ESD.260 [] 2 22 ** *2 AD vrQ TRC Q Q A DA QT vr Dvr TRC ADvr =+ == = Economic Order Quantity (EOQ) Finding the order quantity Q (and frequency T) that minimizes the total relevant cost.
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© Chris Caplice, MIT 4 MIT Center for Transportation & Logistics – ESD.260 Demand ± Constant vs Variable ± Known vs Random ± Continuous vs Discrete Lead time ± Instantaneous ± Constant or Variable (deterministic/stochastic) Dependence of items ± Independent ± Correlated ± Indentured Review Time ± Continuous ± Periodic Number of Echelons ± One ± Multi (>1) Capacity / Resources ± Unlimited ± Limited / Constrained Discounts ± None ± All Units or Incremental Excess Demand (Shortages) ± None ± All orders are backordered ± Lost orders ± Substitution Perishability ± None ± Uniform with time Planning Horizon ± Single Period ± Finite Period ± Infinite Number of Items ± One ± Many Form of Product ± Single Stage ± Multi-Stage Assumptions: Basic EOQ Model
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© Chris Caplice, MIT 5 MIT Center for Transportation & Logistics – ESD.260 Extensions: Leadtime Order Leadtime ± Positive (nonzero) ± Deterministic Impact ± Does this change Q*? ± What is my new policy? ± What is my new avg IOH? Inventory On Hand Receive Order Demand L = Order Leadtime Inventory On Order EOQ Inventory Policy: Order Q* units when IOH = DL
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© Chris Caplice, MIT 6 MIT Center for Transportation & Logistics – ESD.260 1 1 [] 2 2 1 1 ⎛⎞ ⎜⎟ ⎝⎠ =+ == D Qv r AD m TRC Q Q AD D EPQ EOQ D m vr m Extensions: Finite Replenishment Inventory becomes available at a rate of m units/time rather than all at one time ± Does this change Q*? ± What is my new policy?
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lect8 - Inventory Management Extensions to EOQ Chris...

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