lect12 - Inventory Management Chris Caplice...

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Chris Caplice ESD.260/15.770/1.260 Logistics Systems Oct 2006 Inventory Management More Probabilistic Demand
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© Chris Caplice, MIT 2 MIT Center for Transportation & Logistics – ESD.260 Safety Stock Logic (given x L , σ L , A,D, v, r, & Q) CSL (P 1 ) k P[SO] IFR (P 2 ) G u (k) E[US] s (ROP) TRC(s,Q) SS CSOO (B 1 ) P[SO]=1-CSL SS=k σ Eqn 7.20 G(k)=(1-IFR)Q/ σ CUS (B 2 ) CUS (B 2 ) Eqn 7.23
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© Chris Caplice, MIT 3 MIT Center for Transportation & Logistics – ESD.260 Inputted versus Implied Objectives Any inputted objective implies all others Example ± Average demand over time is considered constant ± Forecast of demand is 13,000 units a year ~ iid Normal ± Lead time is 2 weeks ± RMSE of the forecast = 1,316 units per year ± EOQ = 228 units (A=50 $/order, r=10%, v=250 $/item) ± σ L =258 units and μ L =500 units If mgmt sets P 1 = CSL=.95, what is the implied: ± IFR (P2)? ± Cost per Stockout Event (B1)? ± Cost per Item Shorted (B2)? ± What are my expected units short?
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© Chris Caplice, MIT 4 MIT Center for Transportation & Logistics – ESD.260 An Aside: Lost Sales vs Backorders So far, we have assumed 100% backorders.
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This note was uploaded on 12/06/2011 for the course ESD 1.260j taught by Professor Chriscapliceesd during the Fall '06 term at MIT.

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lect12 - Inventory Management Chris Caplice...

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