Pertemuan 3

TI21P1804
Jl. Dr. Setia Budhi No. 193 MANAJEMEN PERSEDIAAN
Bandung – 40153
Tel. +62.022.2019433.,
2019407
Fax . . +62.022.2019329

Dr. Ir. M. Nurman Helmi, DEA

Program Studi
Teknik Industri
Fakultas Teknik
Universitas Pasundan
 Pertemuan 3

Independent Versus
Jl. Dr. Setia Budhi No. 193
Bandung – 40153
Dependent Demand
Tel. +62.022.2019433.,
2019407
Fax . . +62.022.2019329

Dr. Ir. M. Nurman Helmi, DEA

Program Studi
Teknik Industri
Fakultas Teknik
Universitas Pasundan
 Program Studi
Independent Versus Teknik Industri
Fakultas Teknik
Universitas Pasundan
Dependent Demand

 Independent demand - the

demand for item is independent of
the demand for any other item in
inventory
 Dependent demand - the demand
for item is dependent upon the
demand for some other item in the
inventory
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 3
 Program Studi
Holding, Ordering, and Teknik Industri
Fakultas Teknik

Setup Costs Universitas Pasundan

 Holding costs - the costs of holding or

“carrying” inventory over time
 Ordering costs - the costs of placing
an order and receiving goods
 Setup costs - cost to prepare a
machine or process for manufacturing
an order
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 4
 Program Studi
Teknik Industri
Holding Costs Fakultas Teknik
Universitas Pasundan

Table 12.1
Cost (and range)
Category as a Percent of
Inventory Value
Housing costs (building rent or depreciation, 6% (3 - 10%)
operating costs, taxes, insurance)
Material handling costs (equipment lease or 3% (1 - 3.5%)
depreciation, power, operating cost)
Labor cost 3% (3 - 5%)
Investment costs (borrowing costs, taxes, and 11% (6 - 24%)
insurance on inventory)
Pilferage, space, and obsolescence 3% (2 - 5%)
Overall carrying cost 26%

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 5

 Program Studi
Teknik Industri
Holding Costs Fakultas Teknik
Universitas Pasundan

Table 12.1
Cost (and range) as
a Percent of
Category Inventory Value
Housing costs (building rent or depreciation, 6% (3 - 10%)
operating costs, taxes, insurance)
Material handling costs (equipment lease or 3% (1 - 3.5%)
depreciation, power, operating cost)
Labor cost 3% (3 - 5%)
Investment costs (borrowing costs, taxes, and 11% (6 - 24%)
insurance on inventory)
Pilferage, space, and obsolescence 3% (2 - 5%)
Overall carrying cost 26%
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 6
 Program Studi
Inventory Models for Teknik Industri
Fakultas Teknik
Independent Demand Universitas Pasundan

Need to determine when and how

much to order

 Basic economic order quantity

 Production order quantity
 Quantity discount model

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 7

 Program Studi

Basic EOQ Model Teknik Industri

Fakultas Teknik
Universitas Pasundan

Important assumptions
1. Demand is known, constant, and
independent
2. Lead time is known and constant
3. Receipt of inventory is instantaneous and
complete
4. Quantity discounts are not possible
5. Only variable costs are setup and holding
6. Stockouts can be completely avoided
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 8
 Inventory Usage Program Studi
Teknik Industri
Fakultas Teknik
Over Time Universitas Pasundan

Usage rate Average

Order inventory
quantity = Q
Inventory level

on hand
(maximum
Q
inventory
level) 2

Minimum
inventory
ROP

0
LT LT Time SS

Figure 12.3
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 9
 Program Studi
Teknik Industri
Minimizing Costs Fakultas Teknik
Universitas Pasundan

Objective is to minimize total costs

Curve for total
cost of holding
and setup

Minimum
total cost
Annual cost

Holding cost
curve

Setup (or order)

cost curve
Optimal order Order quantity
Table 11.5 quantity (Q*)
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 10
 Program Studi
Teknik Industri
The EOQ Model Fakultas Teknik
D
Universitas Pasundan
Annual setup cost = S
Q

Q = Number of pieces per order

Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order
H = Holding or carrying cost per unit per year

Annual setup cost = (Number of orders placed per year)

x (Setup or order cost per order)

Annual demand Setup or order

=
Number of units in each order cost per order

= D (S)
Q
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 11
 Program Studi
Teknik Industri
Fakultas Teknik
The EOQ Model Annual setup cost =
D
Universitas Pasundan
Q
S
Q
Annual holding cost = H
2
Q = Number of pieces per order
Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order
H = Holding or carrying cost per unit per year

Annual holding cost = (Average inventory level)

x (Holding cost per unit per year)

Order quantity
= (Holding cost per unit per year)
2

= Q (H)
2
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 12
 Program Studi
Teknik Industri
The EOQ Model Fakultas Teknik
D
Universitas Pasundan
Annual setup cost = S
Q
Q
Annual holding cost = H
2
Q = Number of pieces per order
Q* = Optimal number of pieces per order (EOQ)
D = Annual demand in units for the inventory item
S = Setup or ordering cost for each order
H = Holding or carrying cost per unit per year

Optimal order quantity is found when annual setup cost

equals annual holding cost

D Q
S = H
Q 2
Solving for Q* 2DS = Q2H
Q2 = 2DS/H
Q* = 2DS/H
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 13
 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Determine optimal number of needles to order

D = 1,000 units
S = $10 per order
H = $.50 per unit per year

2DS
Q* =
H
2(1,000)(10)
Q* = = 40,000 = 200 units
0.50

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 14

 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Determine optimal number of needles to order

D = 1,000 units Q* = 200 units
S = $10 per order
H = $.50 per unit per year

Expected Demand D
number of =N= =
orders Order quantity Q*

1,000
N= = 5 orders per year
200

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 15

 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Determine optimal number of needles to order

D = 1,000 units Q* = 200 units
S = $10 per order N = 5 orders per year
H = $.50 per unit per year

Expected time Number of working

between orders days per year
=T=
N

T= 250 = 50 days between orders

5

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 16

 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Determine optimal number of needles to order

D = 1,000 units Q* = 200 units
S = $10 per order N = 5 orders per year
H = $.50 per unit per year T = 50 days

Total annual cost = Setup cost + Holding cost

D Q
TC = Q S + H 2

1,000 200
TC = (
2 00 $10) + 2 ($.50)

TC = (5)($10) + (100)($.50) = $50 + $50 = $100

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 17

 Program Studi
Teknik Industri
Robust Model Fakultas Teknik
Universitas Pasundan

 The EOQ model is robust

 It works even if all parameters and
assumptions are not met
 The total cost curve is relatively flat
in the area of the EOQ

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 18

 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Management underestimated demand by 50%

D = 1,000 units 1,500 units Q* = 200 units
S = $10 per order N = 5 orders per year
H = $.50 per unit per year T = 50 days

TC = D S + H Q
Q 2

1,500 200
TC = ($10) + ($.50) = $75 + $50 = $125
200 2

Total annual cost increases by only 25%

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 19

 Program Studi
Teknik Industri
An EOQ Example Fakultas Teknik
Universitas Pasundan

Actual EOQ for new demand is 244.9 units

D = 1,000 units 1,500 units Q* = 244.9 units
S = $10 per order N = 5 orders per year
H = $.50 per unit per year T = 50 days

D Q
TC = S + H
Q 2
Only 2% less than
1,500 244.9 the total cost of $125
TC = ($10) + ($.50) when the order
244.9 2
quantity was 200
TC = $61.24 + $61.24 = $122.48

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 20

 Program Studi
Teknik Industri
Reorder Points Fakultas Teknik
Universitas Pasundan

 EOQ answers the “how much” question

 The reorder point (ROP) tells when to
order
Demand Lead time for a
ROP = per day new order in days
=dxL
D
d= Number of working days in a year

Dr. Ir. M. Nurman Helmi, DEA TIP54 - 21

 Program Studi

Reorder Point Curve Teknik Industri

Fakultas Teknik
Universitas Pasundan

Q*
Inventory level (units)

Slope = units/day = d

ROP
(units)

Time (days)
Figure 12.5 Lead time = L
Dr. Ir. M. Nurman Helmi, DEA TIP54 - 22