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1、Chapter5InventoryUnit1PlanningInventoryUnit2InventoryManagementUnit1PlanningInventory1DeterminingWhentoOrder2DeterminingHowMuchtoOrderUnit1PlanningInventoryInventorydecisionsarehighriskandhighimpactforsupplychainmanagement.Inventorycommittedtosupportfutures
2、alesdrivesanumberofanticipatorysupplychainactivities.Withoutaproperinventoryassortment,lostsalesandcustomerdissatisfactionmayoccur.Likewise,inventoryplanningiscriticaltomanufacturing.Materialorcomponentshortagescanshutdownamanufacturinglineorforcemodificati
3、onofaproductionschedule,whichcreatesaddedcostandpotentialfinishedgoodsshortages.Asdiscussedearlier,thereorderpointdefineswhenareplenishmentshipmentshouldbeinitiated.Areorderpointcanbespecifiedintermsofunitsorday’ssupply.Thisdiscussionfocusesondeterminingreo
4、rderpointsunderconditionsofdemandandperformancecyclecertainty.1DeterminingWhentoOrder1.DeterminingWhentoOrderThebasicreorderpointformulais:R=D×T,WhereR=Reorderpointinunits;D=Averagedailydemandinunits;andT=Averageperformancecyclelengthindays.Toillustratethis
5、calculation,assumedemandof20units/dayanda10-dayperformancecycle.Inthiscase,R=D×T=20units/day×10days=200units1.DeterminingWhentoOrderTheuseofreorderpointformulationsimpliesthatthereplenishmentshipmentwillarriveasscheduled.Whenuncertaintyexistsineitherdemando
6、rperformancecyclelength,safetystockisnecessarytoaccommodateuncertainty,thereorderpointformulais:R=D×T+SS,WhereR=Reorderpointinunits;D=Averagedailydemandinunits;T=Averageperformancecyclelengthindays;andSS=Safetystockinunits.2.DeterminingHowMuch toOrderLotsiz
7、ingbalancesinventorycarryingcostwiththecostoforder.Thekeytounderstandingtherelationshipistorememberthataverageinventoryisequaltoone-halfoftheorderquantity.Therefore,thegreatertheorderquantity,thelargertheaverageinventoryand,consequently,thegreatertheannualc
8、arryingcost.However,thelargertheorderquantity,thefewerordersrequiredperplanningperiodand,consequently,thelowerthetotalorderingcost.Lotquantityformulationsidentifytheprecisequantitiesatwhichtheannualcom
