Safety Stock James Pappas Logistics Management and Operations‚ TLMT 353‚ Spring 15 American Public University Professor Ernest Hughes 15 June 2015 Safety Stock Safety stock is the parts buffer a business builds into the production line to ensure the through put is not interrupted. Running a successful business means ensuring customer satisfaction to the fullest extent possible. Time is a vital resource in business and not something that the consumer wants to waste. The ability
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6. High Tech‚ Inc. is a virtual store that stocks a variety of calculators in their warehouse. Customer orders are placed; the order is picked and packaged‚ and then shipped to the customer. A fixed order quantity inventory control system (FQS) helps monitor and control these SKUs. The following information is for one of the calculators that they stock‚ sell‚ and ship. Average demand 12.5 calculators per week Lead time 3 weeks Order cost $20/order Holding cost $1.20/calculator/year
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the simplest controls possible and minimal records. The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost‚ while also providing a mechanism for identifying different categories of stock that will require different management and controls. The ABC analysis suggests that inventories of an organization are not of equal value. Thus‚ the inventory is grouped into three categories (A‚ B‚ and C) in order of their estimated importance. ’A’
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3. MATERIALS REQUIREMENT PLANNING (MRP) Kruger & Ramphal (2009: 232) defines Material requirements planning (MRP) as “a computer-based information system used to schedule and order dependent-demand inventories.” Independent demand is demand for final products whereas dependent demand is demand for items that are subassemblies or component parts to be used in production of finished goods. In simpler terms‚ MRP is a production planning process that begins with the demand for finished products‚ and
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REQUIREMENT PLANNING Introduction * MRP is a simple system of calculating arithmetically the requirements of the input materials at different points of time based on actual production plan. * MRP can also be defined as a planning and scheduling system to meet time-phased materials requirements for production operations. MRP Objectives * Reduction in Inventory Cost: By providing the right quantity of material at right time to meet master production schedule‚ MRP tries to avoid the cost of excessive
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planning and control decisions such as when activities should take place‚ where they should happen‚ who should be doing them‚ how much capacity will be needed and so on. This is what enterprise resource planning (ERP) does (see Figure 14.1). It grew out of a set of calculations known as material requirements planning (MRP)‚ which is also described in this chapter. Topic covered in this chapter Supply chain planning and control The market requires... specified time‚ quantity and quality of
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案例：MRP，ValentinCase：Valentin Valentin Inc. is a company who uses MRP to organize its production. The lot-sizing technique they chose for all references is lot-for-lot. They provide part of the product tree structure for products A and B (the figures shown indicate the number of component required to produce a product of the next level). Product Y(2) Product B A Z(3) Y(1) Z(1) W(2) The components Y and W are used exclusively in the production of products A and B. They
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Gershwin MRP Overview • Primary source: Factory Physics by Hopp and Spearman. • Basic idea: Once the final due date for a product is known‚ and the time required for each production step is known‚ then intermediate due dates and material requirement times can be determined. • Original goal: To determine when material for production is required. MRP Overview Demand Demand • ... from outside the system is independent demand. • ... for components or raw material is dependent demand. Before MRP‚ buyers
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MRP is a computer based system which is designed to manage the timing and ordering of the products demanded. The main function of MRP is elementary scheduling‚ inventory control and bill of material processing. Low inventory levels of the organizations are maintained with the help of MRP. It is majorly used for the planning of purchasing‚ manufacturing and delivering activities. The daily problem faced by the manufacturing organizations is that customers want products to be available in short time
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2. What is the relationship between service level‚ uncertainty‚ safety stock and order quantity? How can trade-offs between the elements be made? Inventory policy: Guidelines about what to purchase‚ when to take action and in what quantity. Service level: Performance target specified by management. Defines inventory performance objectives. Measure in terms of order cycle and includes time‚ case fill rate‚ line fill rate‚ order fill rate and any combination of these. Safeety Stock: Safety
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