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The document contains numerical problems related to inventory management and economic order quantity (EOQ). It provides data on annual demand, ordering costs, carrying costs, and unit purchase prices. It then shows the calculations to determine the EOQ, total annual costs, number of orders, and time between orders for each problem. The optimal order quantities and costs are identified based on minimizing total annual inventory costs.
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This document discusses inventory management concepts. It defines independent and dependent demand and describes different types of inventories. It explains the functions of inventory including meeting demand, smoothing production, and protecting against stockouts. Key inventory terms are defined such as lead time, holding costs, and ordering costs. Different inventory models, counting systems, and classification approaches are outlined. The objective of inventory control is to balance customer service and inventory costs. Effective inventory management requires forecasting, lead time knowledge, and cost estimates.
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1) The document discusses various inventory management concepts including reorder level, minimum level, maximum level, average level, danger level, economic order quantity, and inventory turnover ratio.
2) Formulas for calculating these metrics are provided using information about consumption, reorder periods, order costs, and carrying costs.
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This document is a project report on an inventory model submitted by three students. It includes:
1. An introduction to inventory, defining it as stock held for future production or sales in raw material, semi-finished, and finished forms. The objective is to minimize total costs or maximize profits.
2. A section on economic order quantity (EOQ) that describes costs of holding too much or too little inventory and assumptions like uniform demand. It includes a table calculating EOQ for different order quantities.
3. The EOQ formula and an example calculation of EOQ for Frooti beverages based on given demand and costs.
4. A re-order level calculation for Pad
Quantity discount
1. The document discusses quantity discount models, including calculating optimal order quantities (Q*) based on setup, holding, and product costs to determine the lowest total cost.
2. It provides examples of applying these models to determine optimal order quantities for various products given annual demand, costs, and discount price structures.
3. The optimal order quantity is the one that results in the lowest total annual cost based on comparing total costs calculated for different possible order sizes.
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This document discusses various techniques for inventory management. It begins by defining inventory and the objectives of inventory management as maintaining sufficient stock levels for production and sales while minimizing total inventory costs. It then outlines different motives for holding inventory such as transactional, precautionary, and speculative motives. The benefits and risks of holding inventory are also presented. The key techniques discussed include economic order quantity (EOQ) modeling, ABC analysis for categorizing inventory items, just-in-time systems, and methods for determining stock levels.
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The document discusses assembly line balancing which aims to arrange individual tasks across workstations so that the processing time is approximately equal at each station. Key points include:
- Tasks have a required sequence (precedence constraints) that cannot be violated.
- The production rate needed must be met within these constraints.
- Terminology defined includes work elements, total work content, workstation times, cycle time, and balance delay.
- The largest candidate rule is presented as a method where tasks are assigned in descending order of time to the first station that does not exceed the cycle time while respecting precedence constraints.
Types of layout
Principles of Plant layout
Types of Plant layout
Process layout
Product layout
Cellular Manufacturing layout
fixed Position layout
Hybrid Layout
and their Advantages & disadvantages
Costs associated with inventories, ABC, VED, HML, FSN, SDE, SOS, XYZ, MBASIC
slides with references: find the linked PDFs in my profile's upload section
SIM (stores and Inv Mgmt) unit 2:
Cost associated with inventories:
Ordering cost,
carrying cost,
over stocking cost,
under stocking cost,
other costs associated with service level.
Selective inventory controls:
Need of Inventory control,
objectives of inventory control,
concept of selective inventory control,
basis and use of different types of selective controls:
ABC,
VED,
HML,
FSN,
SDE,
SOS,
XYZ,
Multiple basic approach to selective inventory control (MBASlC) approach to drugs.
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- Inventory constitutes a significant part of current assets for many companies, often around 60% of current assets. Effective inventory management is important to avoid unnecessary costs and ensure profitability.
- There are different types of inventory including raw materials, work in progress, and finished goods. The objectives of inventory management are to maintain optimal inventory levels for smooth operations while minimizing costs.
- An optimum inventory level balances ordering costs, carrying costs, and stock-out costs. Both over-investment and under-investment in inventory can be dangerous for a company. Effective inventory management tracks inventory levels and determines when and how much to order.
Methods of Production : Job, Batch & Mass Productiion
The document discusses three main methods of production: job production, batch production, and mass production. Job production involves producing one unique item at a time. Batch production produces similar items in batches before switching to another product. Mass production continuously produces the same goods on a production line to benefit from large-scale economies. The methods vary in their advantages like meeting custom needs versus economies of scale, and disadvantages like time efficiency versus flexibility.
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The document discusses the economic order quantity (EOQ) model, which aims to minimize total inventory costs by determining the optimal order quantity. It defines EOQ as the order quantity that balances ordering costs and carrying costs. The key assumptions of the EOQ model are constant demand, lead time, and costs. The document presents the mathematical formula for calculating EOQ and provides an example calculation. It also describes two EOQ models: the 'Q' model with fixed reorder quantities and the 'P' model with periodic reviews and orders.
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The document discusses cycle inventory and economies of scale in supply chains. Cycle inventory is the average inventory that builds up due to purchasing or producing goods in batches larger than customer demand. This allows companies to benefit from economies of scale by reducing production and transportation costs. While cycle inventory lowers costs, it also increases the average time goods spend in the supply chain before being sold. The optimal lot size balances order and holding costs to minimize total supply chain costs.
Operation management problems
1) The document provides data on production rates, setup costs, machine times, and failure probabilities for multiple production problems. It asks the reader to calculate economic order quantities, production rates, total costs, and other metrics.
2) Specific calculations include determining EOQ, production rates given changes in efficiency or capacity, optimal production setup based on costs, and expected annual maintenance costs given failure probabilities.
3) Multiple choice questions are included at the end for practice.
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Inventory management involves balancing ordering costs, holding costs, and shortage costs. The economic order quantity (EOQ) and economic production quantity (EPQ) models can be used to determine the optimal order size to minimize total inventory costs. EOQ assumes constant demand and no production, while EPQ includes production rate. ABC analysis classifies inventory into A, B, and C items based on annual dollar value to focus control policies on higher value items. Cycle counting helps ensure accurate inventory records on a periodic basis according to an item's classification.
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This document discusses inventory management in supply chains. It begins by defining inventory as materials awaiting future sale or use. It then describes the different types of inventory held at various stages of the supply chain, from raw materials to finished goods.
The document outlines the costs associated with holding inventory, including purchase, ordering, and holding costs. It introduces concepts like economic order quantity (EOQ) and economic production quantity (EPQ) models to determine optimal lot sizes that minimize total costs.
The role of cycle inventory is explained, which allows different supply chain stages to purchase in larger lots than customer demand to take advantage of economies of scale. However, this increases total inventory levels and costs across the supply chain. Finally, the
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Total quality management (TQM) is a management approach focused on quality that involves all members of an organization. It aims for long-term success through customer satisfaction and benefits for all stakeholders. TQM embeds quality awareness into all organizational processes. It has been widely used in manufacturing, education, call centers, government, and service industries. TQM principles include continuous improvement, employee involvement, a focus on meeting customer needs and processes, and leadership commitment.
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Inventory Control
Inventory is essential for organizations to operate smoothly but controlling inventory is important to balance operations and demand. There are different types of inventory including raw materials, work in progress, and finished goods. Managing inventory effectively requires considering various costs like purchasing, setup, holding, and shortage costs. Classification techniques help analyze which items have the highest costs and value to focus inventory control efforts.
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1) An officer analyzed fatal accident data from 2001-2006 across several Indian states to determine if the average number of accidents was equal among states. ANOVA results showed no significant difference between states.
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Or
- 1. Inventory Management Numerical Problems
- 2. Ques 1:- The purchase manager currently follows EOQ policy of ordering for an item in the stores of his company. The annual demand of the item is 1600 units. Its carrying costs is 40% of the unit cost where the unit cost is Rs 400. The ordering cost is Rs 500 per order. Recently the vendor is supplying that item gives a discount of 10% in its unit cost if the order size is minimum of 500 units (a) Find the EOQ and the corresponding total cost per year. (b) Check whether the discount offer given by the vendor can be considered by the purchase manager. Solution: The data of the problem are:- D=1600 Units per year S=Rs 500 per order H= 0.4*400=Rs 160 per unit per year
- 3. Therefore, the economic order quantity TC =PD+D.S/Q+Q.H/2 = 400.1600+1600.500/100+100.160/2 =656000 per year For Proposed ordering system Minimum order size (Q)=500 Units Price (after 10% discount)=Rs 360 H=0.4*360=Rs144 EOQ= =100 Units
- 5. Ques 2. A company currently purchases one of its items for Rs. 2 per unit. The Ordering cost is Rs. 20 per order and the Carrying cost is 20% of its purchase price per unit per year. The annual demand is 2500 units. A new vendor offers quantity discount for the same item as showed: Calculate Best Order Quantity, No. of Orders & Cycle Time Quantity Price per Unit (Rs.) Discounted Price Less than 1500 Units Rs. 2 Rs. 2 1500 - 2500 Units 97% of Rs. 2 Rs. 1.94 2500 & more Units 95% of Rs. 2 Rs. 1.90
- 10. Ques 4. The Annual demand of an item in the stores of a foundry is 9000 units. Its annual carrying cost is 15% of the purchase price of the item per year, where the purchase price is 20Rs per unit. The ordering cost is 15Rs per order. Presently the order size of the item is the average monthly demand that item. Find the EOQ and compare its cost with the ordering system and find the corresponding cost advantage if exists?
- 12. 3 300
- 17. Question:-Annual demand for an item is 6000 units. Ordering cost is Rs.600 per order. Inventory carrying cost is 18% of the purpose price /units/year. Theprice breakups are as below. Quantity price (in Rs.)Per units 0≤Q1<2000 20 2000≤Q2<4000 15 4000≤Q3 9 Find the optimal order size.
- 21. Thank You