MGSC 395 Lecture Notes - Lecture 8: Carrying Cost, Lead Time, Coq
11 Dec 2017
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Accounting view of inventory: raw material, wip, finished goods, stock. Cycle inventory a. b. c. d. e. f. Purchase large quantity of raw material to convert to finished goods. Just in case: uncertain demand or uncertain lead time. Amount of inventory that is on the way dl. D = annual demand d (bar) = average demand. The lot size that minimized total annual cycle inventory holding and ordering costs. Average inventory*holding cost + total lots ordered in year *ordering cost. Continuous review: scanning barcode on item, checks inventory every time. Inventory position = one hand + scheduled receipts - backorder. If ip rop, create a new order. Re-order point: demand and lead time are constant. Need to know what real demand looks like. Dlt = standard deviation of demand during lead time. Dlt = d z = service level policy. Service level policy is 90%: meaning 10% time, stock-out is ok.
