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57 Cards in this Set
- Front
- Back
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Cost Tradeoffs with Respect to Inventory
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-what are required service levels for market
-cost tradeoffs -inventory costs is money that could be used in other areas of the company |
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Reasons for holiday inventory
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-maintain cust. service requirements
-leverage economies of scale for production -take advantage of purchase discounts -take advantage of transportation discounts -buffer against demand and leas time variability - hedge against risk |
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High inventory levels yield
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-better cust. service
-stockout protection -short lead times -lower cost per unit -large lot production and transportation economies -quantity discounts and inflation hedging |
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Low inventory levels yield
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-lower holding costs
-easy/accurate control of inventory -focus on quality execution (fulfillment) |
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2PD/CV
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EOQ Equation
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the ordering cost
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P
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the annual demand/usage
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D
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annual inventory carrying costs
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C
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avg. product cost of 1 unit
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V
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safety stock
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buffers against uncertainty
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2 major sources of uncertainty
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demand
performance cycle |
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demand
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we dont expect sales=forecast
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performance cycle
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we don't expect logistical execution at a constant rate
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as service level increases
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holding/total cost increase
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Fixed Order Point/Quantity
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determine a level at which to reorder the EOQ; interval may vary but not the order quantity
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Fixed Order Interval
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quantity ordered varies but not the interval between orders, requires forecasting of demand, by lead time
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fixed interval
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Which has more S, fixed point/quantity or fixed interval?
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fixed order point/quantity
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requires constant monitoring of inventory
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fixed order interval
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requires reliable demand forecasts
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fixed order point/quantity
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safety stock is needed during lead times only
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fixed order interval
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SS protects against order lead time and next order interval
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4 ways to reduce inventory
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forecasting
inventory centralization postponement supply chain inventory coordination |
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inventory centralization
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the square root law (meister rule)
risk pooling |
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the principle of postponement
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waiting to:
label package assemble manufacture all need intra vs inter (organization) |
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inbound supply chain inventory coordination
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just in time
supplier managed inventory |
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outbound supply chain inventory coordination
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quick response
continuous replenishment efficient consumer response vendor managed inventory collaborative planning/forecasting/replenishment |
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cycle stocl
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inventory maintained for normal sales
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safety stock
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inventory maintained to buffer against uncertainties - NEVER expected to be used
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in-transit stock
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rolling stocks
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speculative stock
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inventory acquired to hedge against future price and availability changes
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seasonal stock
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speculative stock held in anticipation of peak demand
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dead stock
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inventory that has lost normal value
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demand
performance execution of suppliers |
2 safety stock uncertainties
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ordering costs and inventory costs
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focuses of the EOQ
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limitations of EOQ
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doesnt account for quantity discounts
doesnt consider interactions between items doesnt account for minimum order quantities doesnt factor in transportation discounts not appropriate for items with unstable demand |
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lead time
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time that elapses when you place an order until that order is received
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production lead time
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time from when a customer places the order till the order can be delivered to the customer's door
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lead time demand
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most appropriate when utilizing a forecasting system and thus the order quantity continually changes based on the predicted demand
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lead time demand
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often used in just in time operations or quick response
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inventory positions
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raw materials
in process finished goods at plant finished goods in field |
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inventory carrying costs
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capital
inventory service storage space inventory risk |
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summary of data collection procedure
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used to figure out inventory carrying costs
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inventory turnover
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the cost of goods sold divided by the average inventory for a period
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increase in turns
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decreases inventory carrying costs
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pitfalls of inventory management
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no supply chain-wide metrics
inadequate definition of cust. service inaccurate delivery status data inefficient information systems ignoring the impact of uncertainty simplistic inventory stocking policies discriminating against internal customers poor coordination incomplete shipment methods analysis incorrect assessment of inventory costs organizational barriers product process design w/o logistics considerations separation of SC design from operational decisions |
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facility location
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choosing the locations for distribution centers, warehouses, and production facilities to facilitate logistical effectiveness and efficiency
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cost considerations
customer service expectations location of customer or supply markets natural resources market for goods labor availability taxes and incentives transportation considerations proximity to industry clusters trade patterns |
factors that influence facility location decisions
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18.5%
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3 months after a disruption, a shareholders value goes down ______
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identify risk
analyze risk prioritize risk mitigate risk monitor risk |
order or risk mgmt.
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why risk mgmt may not work
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where to score the unforseeable
justifying protection against low probability/high consequence events assumes future resembles past |
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resilience
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the capacity to SURVIVE ADAPT and GROW in the face of turbulent change
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vulnerabilities
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forces of change; fundamental factors that make an enterprise susceptible to disruptions
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capabilities
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mgmt controls; attributes that enable an enterprise to anticipate and overcome disruptions
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increasing capabilities
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decreases/erodes profits
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increasing vulnerabilities
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increases exposure to risk
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Vulnerabilities Resilience Factors
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turbulance (of environment)
deliberate threats external pressures resource limits sensitivity connectivity supplier/cust. disruptions |
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Capabilities Resilience factors
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flexibility in sourcing and fulfillment
capacity efficiency visibility adaptability anticipation recovery dispersion collaboration organization market position security financial strength |
