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Transcript of Planeacion de Los Recursos
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Chapter 7:
Inventory Decision Making
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Chapter 7 Management of Business Logistics, 7th Ed. 2
Learning Objectives - After reading this
chapter, you should be able to do the following:
Understand the fundamental differencesamong approaches to managing inventory.
Appreciate the rationale and logic behind theEconomic Order Quantity (EOQ) approach toinventory decision making, and be able tosolve some problems of a relatively
straightforward nature.
Understand alternative approaches tomanaging inventory --- JIT, MRP, and DRP.
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Chapter 7 Management of Business Logistics, 7th Ed. 3
Learning Objectives Realize how variability in demand and order
cycle length affects inventory decision
making. Know how inventory will vary as the number
of stocking points decreases or increases.
Recognize the contemporary interest in andrelevance of time-based approaches toinventory management.
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Chapter 7 Management of Business Logistics, 7th Ed. 4
Learning Objectives Make needed adjustments to the basic EOQ
approach to respond to several special types
of applications.
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Chapter 7 Management of Business Logistics, 7th Ed. 5
Fundamental Approaches to
Managing Inventory Basic issues are simplehow much to order
and when to order.
Additional issues arewhere to store inventoryand what items to order. Traditionally, conflicts were usually presentas
customer service levels increased, investment
in inventory also increased. Recent emphasis is on increasing customer
service and reducing inventory investment.
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Chapter 7 Management of Business Logistics, 7th Ed. 6
Fundamental Approaches to
Managing Inventory Four factors might permit this apparent
paradox, that is, the firm can achieve higher
levels of customer service without actuallyincreasing inventory:
More responsive order processing
Ability to strategically manage logistics data
More capable and reliable transportation
Improvements in the location of inventory
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Chapter 7 Management of Business Logistics, 7th Ed. 7
Figure 7-1 Relationship between
Inventory and Customer Service Level
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Chapter 7 Management of Business Logistics, 7th Ed. 8
Key Differences among Approaches
to Managing Inventory Dependent versus Independent Demand
Dependent demand is directly related to the
demand for another product. Independent demand is unrelated to the
demand for another product.
For many manufacturing processes, demand
is dependent. For many end-use items, demand is
independent.
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Chapter 7 Management of Business Logistics, 7th Ed. 9
Key Differences among Approaches
to Managing Inventory Of the inventory management processes in
this chapter, JIT, MRP and MRPII are
generally associated with items havingdependent demand.
Alternatively, DRP and the EOQ models aregenerally associated with items exhibiting
independent demand.
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Chapter 7 Management of Business Logistics, 7th Ed. 10
Key Differences among Approaches
to Managing Inventory Pull versus Push
Pull approach is a reactive system, relying
on customer demand to pull productthrough a logistics system. MacDonalds isan example.
Push approach is a proactive system, anduses inventory replenishment to anticipatefuture demand. Catering businesses areexamples of push systems.
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Chapter 7 Management of Business Logistics, 7th Ed. 11
Key Differences among Approaches
to Managing Inventory Pull versus Push
Pull systems respond quickly to sudden or
abrupt changes in demand, involve one-waycommunications, and apply more toindependent demand situations.
Push systems use an orderly and disciplinedmaster plan for inventory management, andapply more to dependent demandsituations.
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Chapter 7 Management of Business Logistics, 7th Ed. 12
On the Line:
American Cancer Society ACS constructed a world class automated order
fulfillment center in Atlanta.
Order cycle time was reduced to five businessdays.
Centralized storage reduced waste andobsolescence of educational materials.
Centralized shipment reduced freight rates. The new center saved $8 million in the first year
alone.
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Chapter 7 Management of Business Logistics, 7th Ed. 13
Fixed Order Quantity Approach
(Condition of Certainty): Inventory Cycles In this example, each cycle starts
with 4,000 units:
Demand is constant at the rateof 800 units per day.
When inventory falls below 1,500 units, anorder is placed for an additional 4,000 units.
After 5 days the inventory is completely used. Just as the 4,000th unit is sold, the next order
of 4,000 units arrives and a new cycle begins.
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Chapter 7 Management of Business Logistics, 7th Ed. 14
Figure 7-2 Fixed Order Quantity
Model under the Condition of Certainty
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Chapter 7 Management of Business Logistics, 7th Ed. 15
Fixed Order Quantity Approach (Conditionof Certainty): Simple EOQ Model
Simple EOQ Model Assumptions
Continuous, constant, known and infinite rate
of demand on one item of inventory. A constant and known replenishment time.
Satisfaction of all demand.
Constant cost, independent of order quantityor time.
No inventory in transit costs.
No limits on capital availability.
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Chapter 7 Management of Business Logistics, 7th Ed. 16
Fixed Order Quantity Approach (Conditionof Certainty): Simple EOQ Model
Simple EOQ Model Variables
R = annual rate of demand
Q = quantity ordered (lot size in units) A = order or setup cost
V = value or cost of one unit in dollars
W = carrying cost per dollar value in percent
S = VW = annual storage cost in $/unit per year
t = time in days
TAC = total annual costs in dollars per year
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Chapter 7 Management of Business Logistics, 7th Ed. 17
Figure 7-3Inventory Carrying Cost
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Chapter 7 Management of Business Logistics, 7th Ed. 18
Figure 7-4Order or Setup Cost
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Chapter 7 Management of Business Logistics, 7th Ed. 19
Figure 7-5Inventory Costs
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Chapter 7 Management of Business Logistics, 7th Ed. 20
Fixed Order Quantity Approach (Conditionof Certainty): Simple EOQ Model
TAC = QVW +AR or TAC = QS +AR
2 Q 2 Q
First term is the average carrying cost
Second term is order or setup costs per year
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Chapter 7 Management of Business Logistics, 7th Ed. 21
Figure 7-6Sawtooth Model
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Chapter 7 Management of Business Logistics, 7th Ed. 22
Fixed Order Quantity Approach (Conditionof Certainty): Simple EOQ Model
TAC = QVW +AR or TAC = QS +AR
2 Q 2 Q
Solving for Q gives the following expressions:
Q= 2 RA or Q = 2RA or Q = 2RAVW or S VW S
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Chapter 7 Management of Business Logistics, 7th Ed. 23
Fixed Order Quantity Approach (Conditionof Certainty): Simple EOQ Model
Where R = 3600 units V = $100; W = 25%;S (or VW)= $25; A = $200 per order
Q= 2 RA or Q = 2RA or Q = 2RAVW or S VW S
2*3600*$200 2*3600*$200$100*25% $25
Q = 240 units Q = 240 units
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Chapter 7 Management of Business Logistics, 7th Ed. 24
Figure 7-7Sawtooth Models
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Chapter 7 Management of Business Logistics, 7th Ed. 25
Table 7-1Total Costs for Various EOQ Amounts
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Chapter 7 Management of Business Logistics, 7th Ed. 26
Figure 7-8 Graphical Representation ofthe EOQ Example
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Chapter 7 Management of Business Logistics, 7th Ed. 27
Fixed Order Quantity Approach(Condition of Certainty)
Summary and Evaluation of theFixed Order Quantity Approach:
EOQ is a popular inventory model. EOQ doesnt handle multiple locations as well as a
single location.
EOQ doesnt do well when demand is not constant.
Minor adjustments can be made to the basic model.
Newer techniques will ultimately take the place of EOQ.
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Chapter 7 Management of Business Logistics, 7th Ed. 28
Fixed Order Quantity Approach(Condition of Uncertainty)
Uncertainty is a more normal condition.
Demand is often affected by exogenous
factors---weather, forgetfulness, etc. Lead times often vary regardless of carrier
intentions.
Examine out Figure 7-9. Note the variability in lead times and
demand.
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Chapter 7 Management of Business Logistics, 7th Ed. 29
Figure 7-9 Fixed Order Quantity Modelunder Conditions of Uncertainty
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Chapter 7 Management of Business Logistics, 7th Ed. 30
Fixed Order Quantity Approach(Condition of Uncertainty)
Reorder Point A Special Note
With uncertainty of demand, the reorder
point becomes the average daily demandduring lead time plus the safety stock.
Examine Figure 7-9 again.
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Chapter 7 Management of Business Logistics, 7th Ed. 31
Fixed Order Quantity Approach(Condition of Uncertainty)
Uncertainty of Demand Affects Simple EOQModel Assumptions:
a constant and known replenishment time.
constant cost/price, independent of orderquantity or time.
no inventory in transit costs.
one item and no interaction amongthe inventory items.
infinite planning horizon.
no limit on capital availability.
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Chapter 7 Management of Business Logistics, 7th Ed. 32
Table 7-2 Probability Distributionof Demand during Lead Time
Demand Probability
100 units 0.01
110 0.06
120 0.24
130 0.38
140 0.24150 0.06
160 0.01
bl bl f
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Chapter 7 Management of Business Logistics, 7th Ed. 33
Table 7-3 Possible Units of InventoryShort or in Excess during Lead Time withVarious Reorder Points
ActualDemand
Reorder Points
100 110 120 130 140 150 160
100 0 10 20 30 40 50 60110 -10 0 10 20 30 40 50
120 -20 -10 0 10 20 30 40
130 -30 -20 -10 0 10 20 30
140 -40 -30 -20 -10 0 10 20
150 -50 -40 -30 -20 -10 0 10
160 -60 -50 -40 -30 -20 -10 0
bl 3 bl f
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Chapter 7 Management of Business Logistics, 7th Ed. 34
Table 7-3 Possible Units of InventoryShort or in Excess during Lead Time withVarious Reorder Points
ActualDemand
Proba-bility
Reorder Points
100 110 120 130 140 150 160
100 0.01 0.0 0.1 0.2 0.3 0.4 0.5 0.6
110 0.06 -0.6 0 0.6 1.2 1.8 2.4 3.0
120 0.24 -4.8 -2.4 0 2.4 4.8 7.2 9.6
130 0.38 -11.4 -7.6 -3.8 0 3.8 7.6 11.4140 0.24 -9.6 -7.2 -4.8 -2.4 0 2.4 4.8
150 0.06 -3.0 -2.4 -1.8 -1.2 -0.6 0 0.6
160 0.01 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0
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Chapter 7 Management of Business Logistics, 7th Ed. 35
Table 7-4 Calculation of Lowest-Cost Reorder Point
Dmnd 100 110 120 130 140 150 160
(e) 0.0 0.1 0.8 3.9 10.8 20.1 30.0
(VW) 0 $2.50 $20 $97.50 $270 $502.50 $750
(g) 30 20.1 10.8 3.9 0.8 0.1 0.0
G=gw $300 $201 $108 $39 $8 $1 $0
GR/Q $4500 $3015 $1620 $585 $120 $15 $0
TAC $4500 $3018 $1640 $682.50 $390 $517.50 $750
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Chapter 7 Management of Business Logistics, 7th Ed. 36
Fixed Order Quantity Approach (Conditionof Certainty): Expanded EOQ Model
Where R = 3600 units V = $100; W = 25%;A = $200 per order; G = 8
Q= 2 R(A + G)VW
2 * 3600 * ($200 + 8)$100 * 25%
Q = approximately 242 units
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Chapter 7 Management of Business Logistics, 7th Ed. 37
Fixed Order Quantity Approach (Conditionof Certainty): Expanded EOQ Model
Where R = 3600 units V = $100; W = 25%;A = $200 per order; G = 8; Q = 242; e = 10.8
TAC = QVW + AR + eVW + GR
2 Q Q
TAC = (242*$100*25%) + (200*3600) + (10.8*$100*25%) + (8*3600)
2 242 242
TAC = $3025 + $2975 + $270 + $119
TAC = $6389 (New value for TAC when uncertainty introduced)
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Chapter 7 Management of Business Logistics, 7th Ed. 38
Fixed Order Quantity Approach (Conditionof Uncertainty): Conclusions
Following costs will rise to cover the uncertainty:
Stockout costs.
Inventory carrying costs of safety stock
Results may or may not be significant.
In text example, TAC rose $389 or
approximately 6.5%. The greater the dispersion of the probability
distribution, the greater the cost disparity.
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Chapter 7 Management of Business Logistics, 7th Ed. 39
Figure 7-10Area under the Normal Curve
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Chapter 7 Management of Business Logistics, 7th Ed. 40
Table 7-5 Reorder Point Alternatives andStockout Possibilities
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Chapter 7 Management of Business Logistics, 7th Ed. 41
Fixed Order Interval Approach
A second basic approach
Involves ordering at fixed intervals and
varying Q depending upon the remainingstock at the time the order is placed.
Less monitoring than the basic model
Examine Figure 7-11.
Amount ordered over each five weeks in theexample varies each week.
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Chapter 7 Management of Business Logistics, 7th Ed. 42
Figure 7-11 Fixed Order Interval Model(with Safety Stock)
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Chapter 7 Management of Business Logistics, 7th Ed. 43
Summary and Evaluation of EOQApproaches to Inventory Management
Four basic inventory models:
Fixed quantity/fixed interval
Fixed quantity/irregular interval
Irregular quantity/fixed interval
Irregular quantity/irregular interval
Where demand and lead time are known,
basic EOQ or fixed order interval model best. If demand or lead time varies, then safety
stock model should be used
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Chapter 7 Management of Business Logistics, 7th Ed. 44
Summary and Evaluation of EOQApproaches to Inventory Management
Relationship to ABC analysis
A items suited to a fixed quantity/irregular
interval approach.C items best suited to a irregular
quantity/fixed interval approach.
Importance of trade-offs Familiarity with EOQ approaches assists the
manager in trade-offs inherent in inventorymanagement.
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Chapter 7 Management of Business Logistics, 7th Ed. 45
Summary and Evaluation of EOQApproaches to Inventory Management
New concepts
JIT, MRP, MRPII, DRP, QR, and ECR also take
into account a knowledge and understandingof applicable logistics trade-offs.
Number of DCs
The issue of inventory at multiple locations in alogistics network raises some interestingquestions concerning the number of DCs, theSKUs at each, and their strategic positioning.
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Chapter 7 Management of Business Logistics, 7th Ed. 46
Additional Approaches toInventory Management
Three approaches to inventory managementthat have special relevance to supply chain
management: JIT (Just in Time)
MRP (Materials Requirements into Planning)
DRP (Distribution Resource Planning)
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Chapter 7 Management of Business Logistics, 7th Ed. 47
Time-Based Approaches toReplenishment Logistics: JIT
Definition and Components of JIT Systems - designedto manage lead times and eliminate waste.
Kanban - refers to the informative signboards oncarts in a Toyota system of delivering parts to theproduction line. Each signboard details the exactquantities and necessary time of replenishment.
JIT operations - Kanban cards and light warning
system communicate possible productioninterruptions.
Fundamental concepts - JIT can substantially reduceinventory and related costs.
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Chapter 7 Management of Business Logistics, 7th Ed. 48
Time-Based Approaches toReplenishment Logistics: JIT
Definition and Components of JIT Systems -designed to manage lead times and eliminatewaste.
Goal is zero inventory, and zero defects.
Similarity to the two-bin system - one binfills demand for part, the other is used when
the first is empty. Reduces lead times through requiring small
and frequent replenishment.
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Chapter 7 Management of Business Logistics, 7th Ed. 49
Time-Based Approaches toReplenishment Logistics: JIT
JIT is a widely used and effective strategy formanaging the movement of parts, materials,
semi-finished products from points of supplyto production facilities.
Product should arrive exactly when a firmneeds it, with no tolerance for early or late
deliveries. JIT systems place a high priority on short,
consistent lead times.
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Chapter 7 Management of Business Logistics, 7th Ed. 50
JIT versus EOQ Approaches toInventory Management
Six major differences:
First, JIT attempts to eliminate excess
inventories for both buyer and seller. Second, JIT systems involve short
production runs with frequentchangeovers.
Third, JIT minimizes waiting lines bydelivering goods when and where needed.
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Chapter 7 Management of Business Logistics, 7th Ed. 51
JIT versus EOQ Approaches toInventory Management
Fourth, JIT uses short, consistent leadtimes to satisfy inventory needs in a timelymanner.
Fifth, JIT relies on high-quality incomingproducts and on exceptionally high-qualityinbound logistics operations.
Sixth, JIT requires a strong, mutualcommitment between buyer and seller,emphasizing quality and win-win outcomesfor both partners.
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Chapter 7 Management of Business Logistics, 7th Ed. 52
Table 7-6 EOQ versus JIT Attitudes andBehaviors
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Chapter 7 Management of Business Logistics, 7th Ed. 53
Time-Based Approaches toReplenishment Logistics: JIT
JIT versus Traditional Inventory Management
Reduces excess inventories
Shorter, more frequent production runs Minimize waiting lines by delivering materials when
and where needed
Short, consistent lead times through proximate
location Quality stressed throughout supply chain
Win-win relationships necessary to a healthy supplychain
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Chapter 7 Management of Business Logistics, 7th Ed. 54
Time-Based Approaches toReplenishment Logistics: JIT
Examples of JIT Successes: Apple Computers increase in IT from 10 weeks
to 2 weeks resulted in 18-month $20 million
payback on plant. GM increased production by 100%, but
inventories increased by only 6%.
Norfolk Southern mini-train hauls direct from
one GM plant to another without switchingdelays.
Ryder handles all inbound logistics for Saturn.
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Chapter 7 Management of Business Logistics, 7th Ed. 55
Figure 7-12The Orderly Pickup Concept
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Chapter 7 Management of Business Logistics, 7th Ed. 56
Time-Based Approaches toReplenishment Logistics: MRP
A Materials Requirements Planning (MRP)system consists of a set of logically related
procedures, decision rules, and recordsdesigned to translate a master productionschedule into time-phased net inventoryrequirements for each component item
needed to implement this schedule. MRPs re-plan net requirements based on
changes in schedule, demand, etc.
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Chapter 7 Management of Business Logistics, 7th Ed. 57
Time-Based Approaches toReplenishment Logistics: MRP
Goals of an MRP:
Ensure the availability of materials,
components, and products forplanned production.
Maintain lowest possible inventorylevel.
Plan manufacturing activities, deliveryschedules, and purchasing activities.
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Chapter 7 Management of Business Logistics, 7th Ed. 58
Time-Based Approaches toReplenishment Logistics: MRP
Key elements of an MRP:
Master production schedule
Bill of materials file Inventory status file
MRP program
Outputs and reports
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Chapter 7 Management of Business Logistics, 7th Ed. 59
Figure 7-13An MRP System
Master Production Schedule
MRP Program
Output and Reports
Bill of Material File Inventory Status File
Customer Orders Demand Forecasts
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Chapter 7 Management of Business Logistics, 7th Ed. 60
Figure 7-14 Relationship of Parts to FinishedProduct: MRP Egg Timer Example
1 Egg Timer
2 Ends 1 Bulb 3 Supports
1 Gram of Sand
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Chapter 7 Management of Business Logistics, 7th Ed. 61
Table 7-7 Inventory Status File:MRP Egg Timer Example
Product Gross Req. Inventory Net Req. Lead Time
Egg Timers 1 0 1 1
Ends 2 0 2 5
Supports 3 2 1 1
Bulbs 1 0 1 1
Sand 1 0 1 4
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Chapter 7 Management of Business Logistics, 7th Ed. 62
Figure 7-15 Master Schedule: MRPEgg Timer Example
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Chapter 7 Management of Business Logistics, 7th Ed. 63
Time-Based Approaches toReplenishment Logistics: MRP
Principal advantages of MRP:
Maintain reasonable safety stock.
Minimize or eliminate inventories. Identification of process problems.
Production schedules based on actualdemand.
Coordination of materials ordering. Most suitable for batch or intermittent
production schedules.
d h
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Chapter 7 Management of Business Logistics, 7th Ed. 64
Time-Based Approaches toReplenishment Logistics: MRP
Principal shortcomings of MRP:
Computer intensive.
Difficult to make changes once operating. Ordering and transportation costs may rise.
Not usually as sensitive to short-term
fluctuations in demand. Frequently become quite complex.
May not work exactly as intended.
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Chapter 7 Management of Business Logistics, 7th Ed. 65
Time-Based Approaches to ReplenishmentLogistics: Distribution Resource Planning
MRP sets a master production schedule andexplodes into gross and net requirements.
DRP starts with customer demand and worksbackwards toward establishing a realisticsystem-wide plan for ordering the necessaryfinished products.
Then DRP works to develop a time-phasedplan for distributing product from plants andwarehouses to the consumer.
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Chapter 7 Management of Business Logistics, 7th Ed. 66
Time-Based Approaches to ReplenishmentLogistics: Distribution Resource Planning
DRP develops a projection for each SKU andrequires17:
Forecast of demand for each SKU.
Current inventory level for each SKU.
Target safety stock.
Recommended replenishment quantity.
Lead time for replenishment.
T bl 7 8 DRP T bl f
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Chapter 7 Management of Business Logistics, 7th Ed. 67
Table 7-8 DRP Table forChicken Noodle Soup
Columbus Distribution CenterDistribution Resource Planning
Month January February March
Week 1 2 3 4 5 6 7 8 9
CN Soup Current BOH=4314; Q=3800; SS=1956; LT=1
Forecast 974 974 974 974 989 1002 1002 1002 1061
Schedule
Receipt
0 0 3800 0 0 0 3800 0 0
BOH-End 3340 2366 5192 4218 3229 2227 5025 4023 2962
PlannedOrder
0 3800 0 0 0 3800 0 0 3800
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Chapter 7 Management of Business Logistics, 7th Ed. 68
Figure 7-16Combining DRP Tables
I t t M lti l L ti
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Chapter 7 Management of Business Logistics, 7th Ed. 69
Inventory at Multiple LocationsThe Square Root Law (SQL)
Used to reduce inventory at multiple locations.
As locations increase, inventory also increases,
but not in the same ratio as the growth infacilities.
The square root law (SRL) states that totalsafety stock can be approximated by
multiplying the total inventory by the squareroot of the number of future facilities dividedby the current number of facilities.
I t t M lti l L ti
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Chapter 7 Management of Business Logistics, 7th Ed. 70
Inventory at Multiple LocationsThe Square Root Law
X2= (X1) * (n2/n1) Where:
n1 = number of existing facilities
n2 = number of future facilities
X1= total inventory in existing facilities
X2 = total inventory in future facilities
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Chapter 7 Management of Business Logistics, 7th Ed. 71
Square Root Law Example
Current distribution 40,000 units
Eight facilities shrinking to two
Using the square root law:
X2= (40,000) *(2/8) X2 = 20,000 units
Table 7-9 Example Impacts of Square Root Law
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Chapter 7 Management of Business Logistics, 7th Ed. 72
Table 7 9 Example Impacts of Square Root Lawon Logistics Inventories
Warehouses n Total Av Inv % Change
1 1.0000 3,885 ---
2 1.4142 5,494 141%
3 1.7321 6,729 173%
4 2.0000 7,770 200%5 2.2361 8,687 224%
10 3.1623 12,285 316%
15 3.8730 15,047 387%
20 4.4721 17,374 447%
23 4.7958 18,632 480%
25 5.0000 19,425 500%
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Chapter 7 Management of Business Logistics, 7th Ed. 73
Figure 7-17 Four Directions forReplenishment Logistics
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Chapter 7 Management of Business Logistics, 7th Ed. 74
Time-Based Approaches to ReplenishmentLogistics: Quick Response (QR)
Structure of QR
Shorter, compressed time horizons.
Real-time information available by SKU. Seamless, integrated logistics networks
with rapid transportation, cross-dockingand effective store receipt and distribution
systems.
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Chapter 7 Management of Business Logistics, 7th Ed. 75
Time-Based Approaches to ReplenishmentLogistics: Quick Response (QR)
Structure of QR
Partnership relationships present among
supply chain members. Redesign of manufacturing processes to
reduce lot sizes, changeover times andenhanced flexibility.
Commitment to TQM.
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Chapter 7 Management of Business Logistics, 7th Ed. 76
Figure 7-18Basic Elements of Quick Response (QR)
d h l h
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Chapter 7 Management of Business Logistics, 7th Ed. 77
Time-Based Approaches to ReplenishmentLogistics: Efficient Consumer Response (ECR)
Structure of ECR Grocery industry estimates U.S. savings at
approximately $30 billion.
Ultimate goal is a responsive, consumer-drivensystem in which distributors and suppliers worktogether as business allies to maximize consumersatisfaction and minimize cost. Accurateinformation and high-quality products flow
through a paperless system betweenmanufacturing and check-out counter withminimum degradation or interruption
Figure 7-19 Efficient Consumer
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Chapter 7 Management of Business Logistics, 7th Ed. 78
gResponse: Broad Operating CapabilitiesTailored to Each Unique Partner
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Chapter 7:Summary and Review Questions
Students should review their knowledge of thechapter by checking out the Summary and Study
Questions for Chapter 7.
This is the last slide for Chapter 7
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Chapter 7 Management of Business Logistics, 7th Ed. 80
Figure A7-1 Sawtooth Model Modified forInventory in Transit
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Chapter 7 Management of Business Logistics, 7th Ed. 81
Figure A7-2 EOQ Costs ConsideringVolume Transportation Rate
Table 7A-1 Annual Savings, Annual Cost,
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Chapter 7 Management of Business Logistics, 7th Ed. 82
and Net Savings by Various QuantitiesUsing Incentive Rates
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Chapter 7 Management of Business Logistics, 7th Ed. 83
Figure A7-3 Net Savings Function forIncentive Rate
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End of Chapter 7 and 7A Slides
Inventory Decision Making