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Lecture Production operations management: Lecture 18 - Osman Bin Saif

In this chapter, the following content will be discussed: Compute three measures of forecast accuracy, develop seasonal indexes, conduct a regression and correlation analysis, use a tracking signal. | LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 18 1 Summary of last Session Global Company Profile: Amazon.com Functions of Inventory Types of Inventory Inventory Management ABC Analysis Record Accuracy Cycle Counting Control of Service Inventories 2 2 Summary of last Session (Contd.) Inventory Models Independent vs. Dependent Demand Holding, Ordering, and Setup Costs 3 3 Agenda for this Session Inventory Models for Independent Demand The Basic Economic Order Quantity (EOQ) Model Minimizing Costs Reorder Points Production Order Quantity Model Quantity Discount Models 4 4 Agenda for this Session (Contd.) Probabilistic Models and Safety Stock Other Probabilistic Models Fixed-Period (P) Systems 5 5 Inventory Models for Independent Demand Basic economic order quantity Production order quantity Quantity discount model Need to determine when and how much to order 6 6 The EOQ Model Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ) D = Annual . | LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 18 1 Summary of last Session Global Company Profile: Amazon.com Functions of Inventory Types of Inventory Inventory Management ABC Analysis Record Accuracy Cycle Counting Control of Service Inventories 2 2 Summary of last Session (Contd.) Inventory Models Independent vs. Dependent Demand Holding, Ordering, and Setup Costs 3 3 Agenda for this Session Inventory Models for Independent Demand The Basic Economic Order Quantity (EOQ) Model Minimizing Costs Reorder Points Production Order Quantity Model Quantity Discount Models 4 4 Agenda for this Session (Contd.) Probabilistic Models and Safety Stock Other Probabilistic Models Fixed-Period (P) Systems 5 5 Inventory Models for Independent Demand Basic economic order quantity Production order quantity Quantity discount model Need to determine when and how much to order 6 6 The EOQ Model Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ) D = Annual demand in units for the inventory item S = Setup or ordering cost for each order H = Holding or carrying cost per unit per year Annual setup cost = (Number of orders placed per year) x (Setup or order cost per order) Annual demand Number of units in each order Setup or order cost per order = Annual setup cost = S D Q = (S) D Q 7 7 The EOQ Model Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ) D = Annual demand in units for the inventory item S = Setup or ordering cost for each order H = Holding or carrying cost per unit per year Annual holding cost = (Average inventory level) x (Holding cost per unit per year) Order quantity 2 = (Holding cost per unit per year) = (H) Q 2 Annual setup cost = S D Q Annual holding cost = H Q 2 8 8 The EOQ Model Q = Number of pieces per order Q* = Optimal number of pieces per order (EOQ) D = Annual demand in units for the inventory item S = Setup or ordering cost for each order H = Holding or carrying cost per unit per year Optimal