Statistical analysis of material consumption

Statistical Analysis of
Material
Consumption
25/6/2013
Ori Donner
BI Manager

Objective
• Determine the target inventory level of raw material.
Designations
• Identify the real variance of material consumption , disregarded from
trends , cycles and exceptions.

Tactics
• Filtering vacations and partial working days from the calendar.
• Identify exceptions from the daily consumption chart.
• Omitting material consumption exceptions .
• Calculating Standard Moving Average for month interval.
• Identify consumption trends using Excel trend line function.
• Normalizing the SMA chart according to the trend line.
• Building the SMA histogram.
• Determine the level of inventory according to the level of confidence policy.

Statistical Tools
• Histogram
Histograms are used to plot the density of data, and often for
density estimation: estimating the probability density
function of the underlying variable. The total area of a
histogram used for probability density is always normalized to
1. If the length of the intervals on the x-axis are all 1, then a
histogram is identical to a relative frequency plot (Wikipedia).

Statistical Tools
• Moving average (SMA = Standard Moving Average)
A moving average is commonly used with time series data to smooth
out short-term fluctuations and highlight longer-term trends or
cycles. The threshold between short-term and long-term depends on
the application, and the parameters of the moving average will be set
accordingly. For example, it is often used in technical analysis of
financial data, like stock prices, returns or trading volumes. It is also
used in economics to examine gross domestic product, employment
or other macroeconomic time series (Wikipedia).

Legend
• The survey is relevant only for full working days between
1/1/2012 – 17/6/2013 , which is actually 352 days (samples).
• Raw data is taken from daily work order report forms not
from inventory log, the amount of raw material consumed is
computed as an aggregation from BOM.
• Each SMA is calculated for 22 work days , which is the
average working days in a month. The SMA date is the first
date of the 22 set of dates , i.e :
1/1/2012 SMA refers to the average material
consumption between 1/1/2012 – 30/1/2012
2/1/2012 SMA refers to the average material
consumption between 2/1/2012 – 31/1/2012 etc.

y = 0.9195x - 37232
R² = 0.1463
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Daily material consumption
PACKING BOX FOR SECURITAS KEYPAD # 7201940

14%
3%
9%
18%
23%
16%
13%
2%
1%
0%
14%
17% 26%
44%
68%
84%
97%
99% 100% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
0-0 0-200 200-400 400-600 600-800 800-1000 1000-1200 1200-1400 1400-1600 1600-1800
Histogram of daily material consumption

y = 0.8766x - 35447
R² = 0.333
0
200
400
600
800
1000
1200
SMA of daily material consumption

3%
5%
11%
24%
20%
12%
20%
4%
3%
8%
20%
44%
64%
76%
96%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-2000 2000-4000 4000-6000 6000-8000 8000-10000 10000-12000 12000-14000 14000-16000
Histogram of SMA daily material consumption

0
200
400
600
800
1000
1200
1400
Trend normalized SMA of daily material consumption

2%
7%
16%
12%
17%
25%
12%
10%
1%2%
8%
24% 37%
53%
78%
90%
99%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-500 500-600 600-700 700-800 800-900 900-1000 1000-1100 1100-1200 1200-1300
Histogram of trend normalized SMA
daily material consumption
Avg = 856
StDev = 181
Tol = 1218

478
0
100
200
300
400
500
600
BROWN PACKING BOX (MH10x50) # 7250014

3%
10%
38%
30%
13%
4%
1%
0% 0%3%
13%
51%
81%
94%
98%
99%
100% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0-0 0-50 50-100 100-150 150-200 200-250 250-300 300-350 350-500

y = -0.0054x + 333.42
R² = 0.0021
0
20
40
60
80
100
120
140
160

1%
3%
14%
16%
21%
26%
16%
4%
1%
4%
17%
33%
54%
80%
96%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-800 800-1000 1000-1200 1200-1400 1400-1600 1600-1800 1800-2000 2000-2200
Avg = 109
StDev = 17
Tol = 144

y = -0.0007x + 53.407
R² = 6E-05
0
10
20
30
40
50
60
70
80
90
BROWN SHIPPING/PACKING BOX # 7250018

3%
14%
50%
24%
6%
3%
1%3%
16%
66%
91%
97%
99% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
0-0 0-15 15-30 30-45 45-60 60-75 75-90

y = -0.0035x + 172.32
R² = 0.0224
0
5
10
15
20
25
30
35
40

1%
2%
4%
29%
28%
23%
9%
3%
1%
3% 8%
37%
65%
88%
97%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
0-200 200-250 250-300 300-350 350-400 400-450 450-500 500-550
Avg = 27
StDev = 3
Tol = 33

y = 0.1902x - 7721.1
R² = 0.1008
0
50
100
150
200
250
300
350
400
450
INTERNAL PACKING BROWN CARTON For 8 x LC-100-6PK # 7250708

31%
3%
12%
21%
14% 14%
2% 2%
0% 0%
31%
34%
46%
67%
81%
95% 97%
99%
100%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
0-0 0-50 50-100 100-150 150-200 200-250 250-300 300-350 350-400 400-450

y = 0.1823x - 7394
R² = 0.2819
0
50
100
150
200
250

4%
10%
12%
22%
27%
8%
13%
4%
4%
14%
26%
49%
75%
83%
96%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-0 0-500 500-1000 1000-1500 1500-2000 2000-2500 2500-3000 3000-3500
Histogram of SMA daily consumption

0
50
100
150
200
250
300

4%
7%
11%
13%
16%
17%
14%
12%
5%
2%
4%
11%
22%
35%
51%
68%
81%
94% 98%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0-80 80-100 100-120 120-140 140-160 160-180 180-200 200-220 220-240 240-260
Histogram of trend normalized SMA
daily material consumption
Avg = 157
StDev = 42
Tol = 242

y = 0.0008x - 29.561
R² = 0.0005
0
5
10
15
20
25
30
35

88%
3% 3%
0%
2% 2% 1% 0%
88%
91%
94%
94%
96%
99%
100%
100%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0-0 0-5 5-10 10-15 15-20 20-25 25-30 30-35

y = 0.0002x - 4.8832
R² = 0.0002
0
1
1
2
2
3
3
4
4
5

57%
4% 4% 4% 4%
9%
6%
2%
6% 5%
57%
61%
64%
68%
72%
80%
87%
88%
95%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
0-0 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90
Histogram of SMA daily consumption
Avg = 1
StDev = 2
Tol = 5

y = 0.015x - 600.34
R² = 0.0137
0
20
40
60
80
100
120
INTERNAL PACKING CARTON 182W # 7260710

28%
24%
20%
7%
5%
7%
5%
3%
1% 1%
28%
52%
72%
79%
84%
91%
96%
99% 99% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-0 0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-100

y = 0.0153x - 613.8
R² = 0.0732
0
5
10
15
20
25
30
35
40
45

23%
32%
12%
14%
13%
6%
0%
23%
55%
67%
81%
94%
100% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
0-100 100-200 200-300 300-400 400-500 500-600 600-700

0
5
10
15
20
25
30
35
40
45
50

1%
10%
25%
14%
23%
15%
6%
4%
2%
1%
11%
36%
50%
73%
89%
95% 98%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
0-5 5-10 10-15 15-20 20-25 25-30 30-35 35-40 40-45
Trend normalized SMA of daily material distribution
Avg = 20
StDev = 8
Tol = 36

y = 0.015x - 600.34
R² = 0.0137
0
20
40
60
80
100
120
Shipping carton brown BOX for 16 x LC-100-6PK # 7260716

31%
3%
11%
21%
15%
14%
2% 2%
0% 0%
31%
34%
45%
66%
81%
95%
97%
99% 100% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
30%
35%
0-0 0-25 25-50 50-75 75-100 100-125 125-150 150-175 175-200 200-225

y = 0.0153x - 613.8
R² = 0.0732
0
5
10
15
20
25
30
35
40
45

4%
7%
10%
17%
14%
22%
9%
5%
12%
1%
4% 11%
21%
38%
51%
74%
82%
87%
99% 100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
5%
10%
15%
20%
25%
0-0 0-200 200-400 400-600 600-800 800-1000 1000-1200 1200-1400 1400-1600 1600-1800

0
20
40
60
80
100
120
140

4%
7%
11%
13%
16%
16%
13%
14%
5%
2%
4% 11%
21%
34%
50%
66%
79%
93%
98%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0-40 40-50 50-60 60-70 70-80 80-90 90-100 100-110 110-120 120-130
Daily material distribution
trend normalized 22 work days interval SMA
Avg = 79
StDev = 21
Tol = 122

-3000
-2500
-2000
-1500
-1000
-500
0
500
1000
20
70
120
170
220
270
Trend normalized SMA of daily boxes consumption
7260716 7250708 7250018 7250014 7201940

Part PartDes
SMA 22 Norm SMA 22
Daily Tol
Avg StDev Avg StDev
7201940 PACKING BOX FOR SECURITAS KEYPAD 631 222 856 181 1218
7250014 BROWN PACKING BOX (MH10x50) 109 17 144
7250018 BROWN SHIPPING/PACKING BOX 27 3 116
7250708 INTERNAL PACKING BROWN CARTON For 8 x LC-100-6PK 110 50 157 42 242
7250740 PACKING BOX FOR SECURITAS KEYPAD 1 2 5
7260710 INTERNAL PACKING CARTON 182W 16 8 20 8 36
7260716 Shipping carton brown BOX for 16 x LC-100-6PK 56 25 79 21 122
Statistical analysis Summary

Statistical analysis of material consumption

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