Lecture 5 - Inventory Management

Question 1

Inventory Definition

Answer 1

Comprises of the inputs into the delivery system or manufacturing process. Part finished items to be sold or supplied to customers.

Question 2

Lecture notes 1

Answer 2

• Inventory/sales ratio less than 1 means more is sold than stored. - Above than one is more stored than sold. Eg 2. 2 in inventory for every 1 sold. - Leaner view of inventory means less inventory, you start seeing problems - see slide. - Order Intervals - Quantity/Demand - Average Demand - Quantity/2 - Order costs - bulk buying cheaper - Total costs and ordering cost must be mentioned if using EOQ in an answer. - Demand is the fundamental key in operations management - Dependent and independent demand - think of car factory vs mechanic. Demand varies for independent as different needs come through the door every day. - MRP - Material Requirement Planning -

Question 3

Lecture Notes 2

Answer 3

• Stock level - NUmber of units in stock. - Stock Value - umber of stock x Unit cost -Weeks of stock cover - Stock level/Annual Demand x 50 (assuming 50 weeks) - ABC analysis looks at break down of sales (categorises items that sell) Can be used to see inventory costs and which products add most value. - The waiting line theory - look it up -

Question 4

Inventory Reduction

Answer 4

Question 5

Queuing Systems

Answer 5

Question 6

Dynamic and Static Queue Discipline

Answer 6

Static - FCFS/FIFO

‘Dynamic’ rules include:

– Selection on the basis of customer attributes

• Required processing time – e.g. shortest processing time (SPT)
• Priority – e.g. triage in medical care)

Preemptive – in process service may be interrupted to serve another customer, e.g. emergency services responding to 999 call) – Selection on the basis of queue status • For example, applying SPT rule when the queue gets very large

Question 7

Expecte Wait time calculation

Answer 7

Question 8

Psychology of Waiting Lines

Answer 8

1. Occupied time feels shorter than unoccupied time
2. Pre-process waits feel longer than in-process waits
3. Anxiety makes the wait seem longer
4. Uncertain waits are longer than known, finite waits
5. Unexplained waits are longer than explained waits
6. Unfair waits are longer than equitable waits
7. The more valuable the service, the longer the customer will wait
8. Solo waits feel longer than group waits
9. Uncomfortable waits feel longer than comfortable waits
10. New or infrequent users feel they wait longer than frequent users