PERT 03 Manajemen Persediaan (1) Fungsi Inventory Inventory Management Inventory Model dengan Independent Demand. EOQ Model

PERT 03 Manajemen Persediaan (1) Fungsi Inventory Inventory Management Inventory Model dengan Independent Demand. EOQ Model

What Is Inventory? Stock of items kept to meet future demand Purpose of inventory management how many units to order when to order 13-2

Types of Inventory Raw material Work-in-progress Maintenance/repair/operating supply Finished goods

The Functions of Inventory To decouple or separate various parts of the production process To provide a stock of goods that will provide a selection for customers To take advantage of quantity discounts To hedge against inflation and upward price changes

The Functions of Inventory (Lanj) Bullwhip effect demand information is distorted as it moves away from the end-use customer higher safety stock inventories to are stored to compensate Seasonal or cyclical demand Inventory provides independence from vendors Take advantage of price discounts Inventory provides independence between stages and avoids work stoppages

Two Forms of Demand Dependent Demand for items used to produce final products Tires stored at a Goodyear plant are an example of a dependent demand item Independent Demand for items used by external customers Cars, appliances, computers, and houses are examples of independent demand inventory

Inventory Costs Carrying cost cost of holding an item in inventory Ordering cost cost of replenishing inventory Shortage cost temporary or permanent loss of sales when demand cannot be met

Holding Costs Obsolescence Insurance Extra staffing Interest Pilferage Damage Warehousing Etc.

Inventory Holding Costs (Approximate Ranges) Category Housing costs Material handling costs Labor cost from extra handling Investment costs Pilferage, scrap, and obsolescence Cost as a % of Inventory Value 6% (3-10% 3% (1-3.5%0 3% (3-5%) 11% (6-24%) 3% (2-5%)

Ordering Costs Supplies Forms Order processing Clerical support Etc.

Setup Costs Clean-up costs Re-tooling costs Adjustment costs Etc.

The Material Flow Cycle

The Material Flow Cycle (lanj) Run time: Job is at machine and being worked on Setup time: Job is at the work station, and the work station is being "setup." Queue time: Job is where it should be, but is not being processed because other work precedes it. Move time: The time a job spends in transit Wait time: When one process is finished, but the job is waiting to be moved to the next work area. Other: "Just-in-case" inventory.

Disadvantages of Inventory Higher costs Item cost (if purchased) Ordering (or setup) cost Costs of forms, clerks wages etc. Holding (or carrying) cost Building lease, insurance, taxes etc. Difficult to control Hides production problems

ABC Analysis Divides on-hand inventory into 3 classes A class, B class, C class Basis is usually annual $ volume $ volume = Annual demand x Unit cost Policies based on ABC analysis Develop class A suppliers more Give tighter physical control of A items Forecast A items more carefully

Classifying Items as ABC % Annual $ Usage 100 80 60 40 20 0 A B C 0 50 100 % of Inventory Items Class % $ Vol % Items A 80 15 B 15 30 C 5 55

ABC Classification: Example PART UNIT COST ANNUAL USAGE 1 $ 60 90 2 350 40 3 30 130 4 80 60 5 30 100 6 20 180 7 10 170 8 320 50 9 510 60 10 20 120 13-1717

ABC Classification: Example (cont.) TOTAL % OF TOTAL % OF TOTAL PART PART VALUE UNIT VALUE COST QUANTITY ANNUAL % USAGE CUMMULATIVE 1 $ 60 90 2 350 A 40 3 30 130 4 80 B 60 5 30 100 6 20 180 7 10 C 170 8 320 50 9 510 60 10 20 120 9 $30,600 35.9 6.0 6.0 8 16,000 18.7 5.0 11.0 2 14,000 16.4 4.0 15.0 1 5,400 6.3 9.0 24.0 4 4,800 5.6 6.0 30.0 3 3,900 4.6 10.0 40.0 6 3,600 4.2% OF TOTAL 18.0 % OF TOTAL 58.0 CLASS ITEMS VALUE QUANTITY 5 3,000 3.5 13.0 71.0 10 A 2,400 9, 8, 2 2.8 71.0 12.0 15.0 83.0 7 B 1,700 1, 4, 3 2.0 16.5 17.0 25.0100.0 $85,400 C 6, 5, 10, 7 12.5 60.0 Example 10.1 13-1818

Techniques for Controlling Service Inventory Include: Good personnel selection, training, and discipline Tight control of incoming shipments Effective control of all goods leaving the facility

Inventory Models Fixed order-quantity models Economic order quantity Production order quantity Quantity discount Probabilistic models Fixed order-period models 1984-1994 T/Maker Co. Help answer the the inventory planning questions!

EOQ Assumptions Known and constant demand Known and constant lead time Instantaneous receipt of material No quantity discounts Only order (setup) cost and holding cost No stockouts

EOQ Model, How Much to Order? Annual Cost Total Cost Curve Holding Cost Curve Order (Setup) Cost Curve Optimal Order Quantity (Q*) Order Quantity

Why Holding Costs Increase More units must be stored if more are ordered Purchase Order Description Qty. Microwave 1 Order quantity Purchase Order Description Qty. Microwave 1000 Order quantity

Why Order Costs Decrease Cost is spread over more units Example: You need 1000 microwave ovens 1 Order (Postage $ 0.33) 1000 Orders (Postage $330) Purchase Order Description Qty. Microwave 1000 Order quantity Purchase Purchase Order Order Description Purchase Description Purchase Order Order Qty. Qty. Description Microwave Microwave Qty. Qty. 1 1 Microwave 1 Description Microwave 1

Deriving an EOQ Develop an expression for setup or ordering costs Develop an expression for holding cost Set setup cost equal to holding cost Solve the resulting equation for the best order quantity

Inventory Order Cycle Order quantity, Q Inventory Level Q 2 Demand rate Average inventory Reorder point, R 0 Lead time Order Order placed receipt Lead time Order Order placed receipt Time 13-26

EOQ Cost Model C o - cost of placing order C c - annual per-unit carrying cost D - annual demand Q - order quantity Annual ordering cost = C o D Q Annual carrying cost = C c Q 2 C o D Total cost = Q + C c Q 2 13-27

EOQ Cost Model Deriving Q opt TC Q C o D TC = + Q C o D = + Q 2 C 0 D 0 = + Q 2 Q opt = 2C o D C c C c Q 2 C c 2 C c 2 Proving equality of costs at optimal point C o D Q Q 2 = Q opt = C c Q 2 = 2C o D C c 2C o D C c 13-28

EOQ Cost Model (cont.) Annual cost ($) Slope = 0 Total Cost Minimum total cost Carrying Cost = C c Q 2 Ordering Cost = Ordering Cost = C o D Q Optimal order Q opt Order Quantity, Q 13-29

EOQ Example C c = $0.75 per gallon C o = $150 D = 10,000 gallons Q opt = Q opt = 2C o D C c 2(150)(10,000) (0.75) C o D C c Q TC min = + Q 2 (150)(10,000) 2,000 TC min = + (0.75)(2,000) 2 Q opt = 2,000 gallons Orders per year = D/Q opt = 10,000/2,000 = 5 orders/year TC min = $750 + $750 = $1,500 Order cycle time = 311 days/(d/q opt = 311/5 = 62.2 store days opt ) 13-3030

EOQ Model, When To Order Inventory Level Optimal Order Quantity (Q*) Average Inventory (Q*/2) Reorder Point (ROP) Lead Time Time

EOQ Model Equations Optimal Order Quantity Expected Number of Orders Expected Time Between Orders d = Working Days ROP = d L D / Year = Q* = = N = 2 D S H D Q * = T = Working Days N / Year D = Demand per year S = Setup (order) cost per order H = Holding (carrying) cost d = Demand per day L = Lead time in days