F.W. Harris- EOQ MODEL
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Transcript of F.W. Harris- EOQ MODEL
F. W. HARRIS – EOQ MODELShah Rukh Zafar Suri (C)Inzamam Ashraf (L)Kashif BashirAsad MustafaMuhammad ImtiazSajid Mehmood
Asad Mustafa
INTRODUCTION (F. W. HARRIS)
INTRODUCTION OF F. W. HARRIS
Born in Deering, Maine on August 8, 1877
Parents are Fred Ford and Harriet Whitney (Fox) Harris
His major contribution as a management scientist is admirable
F. W. Harris – Engineer, Manageme
nt Scientist,
Patent Attorney Holder
F.W. Harris (1877-1962)
HOBBIES
Thoroughly enjoyed life in Los Angeles and the American West
Enthusiastic and lifelong golfer, although only an average player
Trout fishing and took many pack trips to inaccessible area, British Columbia
Photography nut Purely social activities bored him
FAMILY LIFE
F. W. Harris loves outings with his family
F. W. Harris & his wife Eugenia enjoying sitting by a stream near a large grove of trees
FAMILY
ACHIEVEMENTS
President of Big Rock Ranch Co.
Vice President of Wulff Process Co.
Vice President of Patco, Inc
First President of the Los Angeles Patent Law Association
MEMBERSHIPS
Member of the American Bar Association Member of American Patent Law
Association Member of American Institute of Electrical
Engineers Member of American Society of Mechanical
Engineers Member of American Chemical Society Member of the California Club Member of the Wilshire Country Club
Kashif Bashir
BRIEF HISTORY
HISTORY
Born in 1877 and grew up in the Portland, Maine area
He received a high school education till 1895
He worked for four years as an engineering apprentice and draftsman for two Portland employers
1. Belknap Motor Company2. Maine Electric Company
HISTORY
In 1900, he moved to Pittsburgh, Pennsylvania
He became a draftsman and engineer for Heyl and Patterson in Pittsburgh
From 1904—1912, Harris was employed as an engineer for the Westinghouse Electric and Manufacturing Company in East Pittsburgh
ELECTRICAL FIELD HISTORY
Tutoring and self-study had educated him in Electrical Engineering, and he had patented a number of inventions in the Electrical field
These patents had all been assigned to Westinghouse as his employer. Patents continued to be granted in his name and assigned to Westinghouse as late as 1916
HISTORY
At the age of 35, Harris thought to retool his career
He thought that his agreement with Westinghouse barred competitive employment, and blocked him from further inventions in Electrical field
PATENT ATTORNEY HISTORY
In 1912, Harris left Westinghouse and moved to Los Angeles, California
He may have wanted to expand his horizons beyond the confines of Westinghouse
The became a consulting engineer in Los Angeles, and there he entered the field of patent law
PATENT ATTORNEY HISTORY
He was admitted to practice before the U.S. Patent Office in 1914 and became a member of the California Bar in 1916
His admission to practice before the U.S. Supreme Court was in 1922
In Los Angeles, Harris was initially associated with the firm of Townsend, Graham and Harris and later with the firm of Graham and Harris before opening his own office in 1923
PATENT ATTORNEY HISTORY
He was one of the founders and, in 1934, the first president of the Los Angeles Patent Law Association
Up to the time of his death he was a member of the American Bar Association and the American Patent Law Association
He died in Los Angeles on October 27, 1962 at the age of 85
Shah Rukh Zafar Suri
MAJOR CONTRIBUTIONS
CONTRIBUTIONS
His life is full of achievements and contributions in his three fields:
Electrical Engineering
Management Scientist
Patent Attorney Holder
ELECTRICAL FIELD
He had patented a number of inventions in the Electrical field
Harris's activities as an inventor spanned more than 50 years
His first (joint) patent, issued in 1904 and assigned to Heyl and Patterson, was for a speed controller
His last patent, issued in 1958 when he was 80 years old, was for components of a regenerative heat exchanger
ELECTRICAL FIELD
Up-till 1916, were for electrical devices—circuit breakers and switches, fuses, and controllers for electric motors—and were assigned to Westinghouse (Company)
Later patent ones were associated with petroleum extraction—devices for pumping oil, dehydrators and separators for oil emulsions, and apparatus for reaming wells
ELECTRICAL FIELD
Some scatter inventions or works were on:
I. Disc harrowII. Automatic water heatersIII. Side-loading hearse with a fixed
turntable
ELECTRICAL FIELD
Harris contributed frequently to the discussions of technical papers in the Transactions of AIEE during the period 1910-1915
He also served on AIEE's Protective Apparatus Committee in 1915 and 1916
MANAGEMENT SCIENCES
The first paper on management sciences was the one on the EOQ formula
Published in Factory, The Magazine of Management in its February 1913 issue
Cited by more than 100 people in their research papers and over 10k readers in 1913
A dozen more of his articles were published in Factory over the next five years.
PATENT ATTORNEY
Ford Harris authored or coauthored two books and more than a score of articles, comments, and reviews
His writings in this area began in 1914 with a series on practical patent issues that was published in Machinery, and continued through 1954, when he was 76 years old
Inzamam Ashraf
MANAGEMENT SCIENCES
CONTRIBUTIONS TOWARDS MANAGEMENT Ford Harris's writings on management topics
must have begun soon after he left Westinghouse in 1912
His first full paper, "How Many Parts to Make at Once," in which he develops the EOQ model, appeared in Factory, The Magazine of Management in February 1913
Harris´s Economic Order Quantity (EOQ) model has been widely studied and is staple of virtually every management science or inventory management textbook
After this a rapid series of publications begins
CONTRIBUTIONS TOWARDS MANAGEMENT The A. W. Shaw Company’s flagship
publication was System, The Magazine of Business, which was renamed Business Week after it was acquired by McGraw-Hill in 1928
Harris contributed an article on the “make or buy” problem to System in 1914
CONTRIBUTIONS TOWARDS MANAGEMENT "How Much Stock to Keep on Hand" was
also published in the following month in system, The magazine of Business
This takes more of a systems view of the inventory function, and shows considerable understanding of the need for coordination between marketing, engineering, and production
CONTRIBUTIONS TOWARDS MANAGEMENT Ford Harris's original 1913 paper on the EOQ model
was forgotten until its rediscovery in 1988 His chapter on the EOQ model in The Library of
Factory Management was erroneously cited and apparently unread for many years
At various times, others have been credited with the development of the EOQ formula
It does not appear that Harris sought, received, or expected any recognition for this contribution during his lifetime. Even his own family was unaware that he had made such a contribution.
Sajid Mehmood
EOQ MODEL – INVENTORY & INVENTORY CONTROL
INVENTORY
Inventories represent those items which are either stocked for sale or they are in the process of manufacturing or they are in the form of materials, which are yet to be utilized
It is necessary to hold inventories of various kinds to act as a buffer between supply and demand for efficient operation of the system
Thus, an effective control on inventory is a must for smooth and efficient running of the production cycle with least interruptions
BENEFITS OF KEEPING INVENTORIES
To stabilize production To take advantage of price discounts To meet the demand during the
replenishment period To prevent loss of orders (sales) To keep pace with changing market
conditions
INVENTORY CONTROL
Inventory control is a planned approach of determining what to order, when to order and how much to order and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sales
1. Order level - When should an order be placed?
2. Order quantity - How much should be ordered?
OBJECTIVES OF INVENTORY CONTROL adequate supply of products to
customer financial investment in inventories is
minimum Efficient purchasing, storing,
consumption and accounting for materials
maintain the stock within the desired limits
To ensure timely action for replenishment
Scientific base for both short-term and long-term planning of materials
BENEFITS OF INVENTORY CONTROL
Improvement in customer’s relationship Smooth and uninterrupted production
and, hence, no stock out Efficient utilization of working capital Minimizing loss due to deterioration,
obsolescence damage and pilferage Economy in purchasing Eliminates the possibility of duplicate
ordering.
Muhammad Imtiaz
EOQ MODEL – ECONOMIC LOT SIZE FOR INVENTORY CONTROL
EOQ MODEL
How much to order, two basic costs are considered namely:
1. Inventory carrying costs2. Ordering or acquisition costs As the quantity ordered is increased, the inventory
carrying cost increases while the ordering cost decreases.
EOQ MODEL
The ‘order quantity’ means the quantity produced or procured during one production cycle. Economic Order Quantity (EOQ) is that size of order which minimizes total costs of carrying and cost of ordering. i.e., Minimum Total Cost occurs when
Inventory Carrying Cost = Ordering Cost
EOQ - SOLUTION METHODS
Economic order quantity can be determined by two methods:
Tabulation method
Analytical method
TABULATION METHOD - STEPS
Select the number of possible lot sizes to purchase
Determine average inventory carrying cost for the lot purchased
Determine the total ordering cost for the orders placed
Determine the total cost for each lot size chosen which is the summation of inventory carrying cost and ordering cost
Select the ordering quantity, which minimizes the total cost
TABULATION METHOD - EXAMPLE
ANALYTICAL METHOD - ASSUMPTIONS Demand is known and uniform Shortages are not permitted, i.e., as soon as the
level of the inventory reaches zero, the inventory is replenished
Production or supply of commodity is instantaneous. Lead-time is zero
EOQ FORMULAE
C1 = Inventory carrying costC3 = Set-up cost per production runD = Total number of units producedQ = Lot size in each production run
PROS AND CONS
This theory gives systematic approach to find lowest possible cost for economic lot sizes.But its cons also exist:
Demand is not constant in real cases. Demand of Goods fluctuates in real cases
Lead time is also non zero in real cases. Shortages are permitted in real cases. Production and supply is not istantaneous in
real cases.
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