CHAPTER 2 Flashcards
(14 cards)
Which are th functions of inventories?
- buffering the mismatch between supply and demand
- keeping and safeguarding goods.
- protection/ safety to satisfy demand
- speculation to benefit from price fluctuations
- cost optimisation to exploit economies of scale
- production in processes that require the product not to be touched (wine)
Components of inventory decisions:
- cycle inventory
- safety inventory
- seasonal inventory
- level of product availability
Must have for cycle inventory
- continuous review (order when inventory declines to reorder point)
- periodic review (order to raise inventory level to a specific limit)
Name the different delivery types
- traditional supplier process
- supplier warehouse process
- Just in time process
Parts of the cycle inventory and advantage
- lot size (lo que purchase o produces)
- cycle inventory (average of whole inventory)
- take advantage of economies of scale
- reduce cost in supply chain
Write the formula for cycle inventory
I=DT
How to calculate the optimal lot size
Q^2=2DS/hC
Calculate optimal order frequency
N^2=DhC/2S
What is multiechelon cycle inventory?
This chains have multiple stages with many possible players at each stage
- its goal is to decrease total costs by coordinating orders across the supply chain
What is the problem if we calculate the lot size wrongly
- high costs
- more cycle inventory than required
Why do we need safety inventories?
- satisfy the demand that exceeds the amount forecasted
- demand fluctuations
- inventory fluctuations
- deviations in delivery dates
- deviations in delivery amounts
What is the cycle service level
The probability that the demand during lead time (nº weeks) never is bigger than the reorder point
What is the fill rate? (Product and order)
- PRODUCT FILL RATE: part from product demand that is satisfied with products from the inventory.
- ORDER FILL RATE: part of the orders filled form available inventory
Fr= (expected demand- expected shortage)/ expected demand
Positive impacts of safety inventory
- information centralisation
- warehouse specialisation
- product substitution
- improved inventory visibility
