MEIO Optimization Engine

Adexa Planning Webinars
MEIO Series:
The Optimization
Engine

Better Service with Less Inventory
Multi-Echelon Inventory Optimization considers the following when optimizing inventory targets
Forecast error and Stock out costs
Reducing Manufacturing and Distribution Lead Time
Reducing Inventory Costs with Postponement
Lowering Volatility with Inventory Pooling
Same Service Level
Lower Cost

What the MEIO Optimizer Considers
Total L/T 75 Days
Component
Assembly
DC
Hubs
% Service Level
$ Stock out
Electronics Inc.
Canada
PC Inc.
% Service Level
$ Stock out
Computek
HD Supplier
USA
CM2
% Service Level
$ Stock out
Supplier
Japan

+
+
56 Days
17 Days 2 Days = 75 Days
2 Days
Shorten Lead-times to Reduce Inventory
Fabrication
Assembly
DC
Customers
Canada
Electronics Inc.
PC Inc.
Computek
USA
HD Supplier
CM2
Supplier
Japan
Safety Stock levels will increase with lead-time

2 Days
Shorten Lead-times to Reduce Inventory
Fabrication
Assembly
DC
Customers
Canada
Electronics Inc.
PC Inc.
Computek
USA
HD Supplier
CM2
Supplier
Japan
Safety Stock levels will increase with lead-time

$30
$45 $70 $90
Buffer With Less Expensive Inventory
Fabrication
Assembly
DC
Customers
Canada
Electronics Inc.
PC Inc.
Computek
USA
HD Supplier
CM2
It is critical to set expectations on lead-time
for order when postponing and pooling
Supplier
Japan

Inventory Pooling Gains the Advantage of Large Number Averages
Calculate the variation in demand using the BOM and sourcing
Fabrication
Assembly
Hubs
DC
Canada
Electronics
Inc.
PC Inc.
USA
Computek
HD Supplier
Japan
CM2
Supplier
Less variation at common storage

Balancing All the MEIO Factors
Total L/T 75 Days
Component
Assembly
DC
Hubs
% Service Level
$ Stock out
Electronics Inc.
Canada
PC Inc.
% Service Level
$ Stock out
Computek
HD Supplier
USA
CM2
Supplier
% Service Level
$ Stock out
Japan

For More Information
Visit: www.adexa.com
Supply Chain
Planning Blog:http://web.adexa.com/adexa-blog/
For Questions:http://adexa.com/contact/contact.asp
Bill Green at: wgreen@adexa.com
U.S. © 2010 Adexa, Inc. All rights reserved.

MEIO Optimization Engine

by Adexa, Inc. on Jun 22, 2010

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MEIO Optimization Engine — Webinar Transcript