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:rainbow: LEC 7: INVENTORY MANAGEMENT - Coggle Diagram
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LEC 7: INVENTORY MANAGEMENT
1. Types, Functions and costs of inventory
Functions
break the dependencies between stages in the supply chain
geographically separate the consumption of the finished goods from production
buffer uncertainty in the market place
store capacity for later use
Cost of inventory
Types
Reorder point (ROP)
: the lowest inventory level at which a new order must be placed to avoid a stockout. Formula: ROP= lead time demand (LT* average daily usage) + safety stock
2. Inventory models
Economic Order Quantity Model: is to find better quantity/order that minimizes TAIC while taking into account the trade-off btw AHC and AOC. aka EOQ = square root of (2RS/k*C)
Quantity Discount Model: to find quantity/order that min TAIC while tkaing into account the trade-off btw buying on batch to enjoy price discount and AHC. aka Optimal order quantity
Total annual inventory cost (TAIC):
Economic manufacturing quantity model:
Assumptions:
3. ABC Inventory Control system
4. Warehouse management
FIFO - FEFO - LIFO:
Material handling equipment (MHE):
The ABC warehouse layout:
