RESOURCE PROCUREMENTMONEY, MAN, MATERIAL &       MACHINE
RESOURCE MANAGEMENT RESOURCE             RESOURCE LOADING & PROCUREMENT          LEVELING    MATERIAL              SLIP   ...
Types of Inventories• Raw materials & purchased parts• Partially completed goods called  work in progress• Finished-goods ...
ECONOMIC ORDER QUANTITY a THREE WAYS   1 STATEMENT   2 GRAPH   3 FORMULA b BASIC INFORMATION   1 Annual Requirements      ...
ANNUAL DEMAND                                          9,600ORDERING COST                                            225CA...
When to Reorder with EOQ         Ordering• Reorder Point - When the quantity on hand  of an item drops to this amount, the...
The Inventory Cycle                                      Profile of Inventory Level Over Time   Q             UsageQuantit...
ABC Classification SystemClassifying inventory according to somemeasure of importance and allocatingcontrol efforts accord...
ABC Classification of Inventory            Items       Percentage of dollar volume   110                                  ...
Inventory Items Listed inDescending Order of Dollar Volume                                Monthly               Percent of...
Just-In-Time PurchasingJust-in-time (JIT) purchasing is the purchase  of goods or materials such that a delivery    immedi...
Just-In-Time Production            Systems Just-in-time (JIT) production systems take a “demand pull” approach in which go...
Major Features of a JIT System1. Organizing production in manufacturing cells2. Hiring and retaining multi-skilled workers...
Rubber & shoe laces                                                    from supplier justJust-In-Time Processing          ...
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Resource procurement

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Resource procurement

  1. 1. RESOURCE PROCUREMENTMONEY, MAN, MATERIAL & MACHINE
  2. 2. RESOURCE MANAGEMENT RESOURCE RESOURCE LOADING & PROCUREMENT LEVELING MATERIAL SLIP EOQ SPLIT 1 ABC CRASH 2 JIT 3 MACHINERY CONFLICT MANAGEMENT 7 EVALUATION CONTRACTS 4 MONEY 5 MAN ( Human Resource ) 6 ENTREPRISE RESOURCE PLANNING VALUE CHAIN MRP CAD, CAM & CIM 8
  3. 3. Types of Inventories• Raw materials & purchased parts• Partially completed goods called work in progress• Finished-goods inventories – (manufacturing firms) or merchandise (retail stores)• Replacement Parts, Tools & Supplies• Goods in Transit – inwards or outwards
  4. 4. ECONOMIC ORDER QUANTITY a THREE WAYS 1 STATEMENT 2 GRAPH 3 FORMULA b BASIC INFORMATION 1 Annual Requirements 9,600 2 Carrying Cost 3.00 PER UNIT Cost of funds tied up Ware-housing, upkeep and security Insurance Deterioration, theft and obsolescence 3 Order Cost 225 per order Cost of preparing purchase order Locating suppliers Transportation Receiving Costs ( Unloading, Inspection & Storage)
  5. 5. ANNUAL DEMAND 9,600ORDERING COST 225CARRYING COST 3 BY FORMULA BY GRAPH BY STATEMENT 2 9,600 225 2 D OC 4,320,000 1,440,000 1,200EOQ = --------------------------------------------------- 3 CC 3 1,200carry cost and order cost are equal at EOQ 1,200 3 0.5 1,800 8 225 1,800 CARRYING TOTAL COST per TOTALANNUAL No. of AVERAGE COST CARRYING order RDERING ODEMAND Orders STOCK PER UNIT COST COST TOTAL COST a b c d e f g h i Givenassumed a div by bc div by 2 given dxe given bxg f+h 9,600 4 2,400 1,200 3 3,600 225 900 4,500 9,600 8 1,200 600 3 1,800 225 1,800 3,600 9,600 12 800 400 3 1,200 225 2,700 3,900 9,600 16 600 300 3 900 225 3,600 4,500
  6. 6. When to Reorder with EOQ Ordering• Reorder Point - When the quantity on hand of an item drops to this amount, the item is reordered. – Lead time X consumption per unit of Lead Time 2 weeks X 500 unit per week = 1,000 units• Safety Stock - Stock that is held in excess of expected demand due to variable demand rate and/or lead time. – Lead Time from alternative source X consumption per unit of such time.
  7. 7. The Inventory Cycle Profile of Inventory Level Over Time Q UsageQuantity rateon handReorderpoint Time Receive Place Receive Place Receive order order order order order Lead time
  8. 8. ABC Classification SystemClassifying inventory according to somemeasure of importance and allocatingcontrol efforts accordingly.A - very importantB - mod. important High A AnnualC - least important $ value B of items Low C Few Many Number of Items
  9. 9. ABC Classification of Inventory Items Percentage of dollar volume 110 100 90 80 70 60 50 40 30 20 A B C 10 0 0 10 20 30 40 50 60 70 80 90 0 10 Percentage of inventory items (SKUs)
  10. 10. Inventory Items Listed inDescending Order of Dollar Volume Monthly Percent of Unit cost Sales Dollar Dollar Percent of Inventory Item ($) (units) Volume ($) Volume SKUs Class Computers 3000 50 150,000 74 10 A Entertainment center 2500 30 75,000 Television sets 400 60 24,000 Refrigerators 1000 15 15,000 16 30 B Monitors 200 50 10,000 Stereos 150 60 9,000 Cameras 200 40 8,000 Software 50 100 5,000 10 60 C Computer disks 5 1000 5,000 CDs 20 200 4,000 Totals 305,000 100 100
  11. 11. Just-In-Time PurchasingJust-in-time (JIT) purchasing is the purchase of goods or materials such that a delivery immediately precedes demand or use. Companies moving toward JIT purchasing argue that the cost of carrying inventories (parameter C in the EOQ model) has been dramatically underestimated in the past.
  12. 12. Just-In-Time Production Systems Just-in-time (JIT) production systems take a “demand pull” approach in which goods areonly manufactured to satisfy customer orders.
  13. 13. Major Features of a JIT System1. Organizing production in manufacturing cells2. Hiring and retaining multi-skilled workers3. Emphasizing total quality management4. Reducing manufacturing lead time and setup time5. Building strong supplier relationships
  14. 14. Rubber & shoe laces from supplier justJust-In-Time Processing before manufacture. 100 pairs of Send rubber and sneakers... shoe laces directly got it! to the factory. Instantly materials requirementsSales Order are ascertained & purchase order Received issued to supplier Goods Manufactured and shipped to the clients Just-in-Time Production means no inventories of raw materials or work-in-process or finished goods.

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