Inventory Flashcards
Define inventory
Created to compensate for the differences on the timing between supply and demand
What is the single stage inventory system
Supplier stock and then sale operations
What is the two stage inventory systems.
Supplier
Central depot
Distribution
Local Distribution point
Sales operation
Describe the multi -stage inventory system
Suppliers
Input stock stage one
WIP
Stage two
WIP
Stage three
Finished goods stocks
What are the 5 functions of inventory
Marketing
- responds the promotional offers.
Purchasing
- having access to maximum discounts
- allowing speculative purchases
Finance
Production
- production by lots
- necessary for product transit
Clients
- errratic demand
- seasonal
What are the types of inventory ?
Buffer
Cycle
De-coupling
Pipeline
Anticipation
What is the difference buffer inventory and cycle inventory
Buffer
- compensate for unexpected changes in supply and demand
Cycle inventory
- one or more stages of the process cannot supple all the items simultaneously
What is the decoupling stage
Transformed resources move between specialised areas or departments
What is seasonal inventory vs pipeline inventory
Anctipation
- to cope with seasonal demands , fluctuations are large but predictable
Pipeline inventory
- materials that can be instantly transported between point of supply and demand
what are the 4 main things inventory measures ?
Stock cover
- how long stock will last
Stock turns
- how often stock needs to be replenished
Order fulfilment rate
- rate if orders are fulfilled, order delivered on time and in full
Fill rate
- rate of products sold I was able to deliver form my stock without backlog compared to unit ordered
How is the policy of replenishment defined
What - what product should I replenish
When - what moment to replenish
How much - quantity
What is Wilson formula for the ordering cost
Ordering cost (oc) = (d/q)*c
- OC = (Annual Demand / Order Quantity)*Unit ordering cost
What is the formula for the holding cost ?
Hc = d/2*c
What is the formula for total cost ?
Holding cost + ordering cost
- (q/2)c (holding ) + (d/q)c (ordering)
What is the Economic order quantity
Quantity that is ordered or launched that reduces inventory cost
- a compromise between holding and ordering cost
What is the Wilson for maul hypothesis ?
- demand is table
- Consumption is regular and linear
- no stock shortage
- average stock level is q/2
What is the Wilson formula for economic quantity
Eoq = 2dc(ordering)/c(holding) = THE SQAURE ROOT OF ALL OF THIS
WHAT IS THE FORMULA FOR THE RE-ORDER LEVEL
D x order lead time
Order lead time is found on a graph
- you let the reorder point (x axis) - this axis will be inventory level and reorder level (y -axis) - this will serve as time
- draw a straight line through the point where the two lines meet to get the second time on the y axis
What is the continuous review approach ? And how does it affect the re order level formula
- approach with safety stock to avoid stock out When demand and or order lead times are uncertain
Rol = demand x order lead time + safety shock
What is periodic review and what is the formula for it.
Approach to order timing with prep allistic demand and lead time
QM = MAXIMUM QUANITY = ROL+ Q
TF = TIME INTERVALS BETWEEN ORDERS = EOQ/D
Describe the mixed method replenishment approach
- When
Attheendofthetimeinterval • between orders (EOQ/D)
Whentheinventoryreaches the reorder level (ROL)
- How
The Economic Order Quantity
(Q = EOQ)
• Up to the maximum Quantity
(Q=Qm –IP)
known quantities
unknown quantities 3
