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    7 views3 pages

    Inventory 8-10

    Uploaded by

    MohammadKazaal

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 3
    Inventory Corot chapter 13 601 Fixed-Onder Quantity Model to compute Q, such asthe simple Oy. model previously discussed. The reorder point is then set to cover the expected demand during the lead time plus a safety stock determined by the desired service level. Thus, the Key difference heaween a fted-order quantity model where demand is known and one where demand is uncertain isin computing the reorder point. The ‘onder quantity isthe same in both cases. The uncertainty element is taken into account in the safety stock, “The reorder ps3) A +20, where Reorder point in units werage daily demand Lead time in days (time between placing an order and receiving te items) jumber of standard deviations fora specified service probability 9, = Standard deviation of usage during lead time aie ‘The term 20; is the amount of safety stock. Note that if safety stock is positive, the effects to place areorder sooner. Thats, R without safety stock is simply the average demand during the lead time. I lead time usage was expected to be 20, for example, and safety stock was com- ‘puted to be 5 units then the order would be placed sooner, when 25 units remained. The greater ‘the safety stock, the sooner the order is placed. Computing d, o;, amd z Demand during the eplenishment ead ime is eally an «stimate o forecast of expected use of inventory’ from the time an order is placed to when it is received. It may bea single number (for example ifthe lead time is a month, the demand may be taken asthe previous years demand divided by 12), o it may be a summation of expected demands over the ead time (such asthe sum of daily demands over a 30-day lead ime). For the daily demand station, d can bea forecast demand using any ofthe models in ‘Chapter 13 on forecasting. For example, if a 30-day period was used to calculated, then a simple average would be ps6) 7-2 where is the number of days. Puanyine an Caytnouine THF Sure CHA ‘The standard deviation of the daily demand is ps7 aC 0 cause ay refers to one day, if ead time extends over several days, we can use the sta- tistical premise that the standard deviation of a series of independent occurrences is equal to the square root of the sum of the variances. That is, in general, loptoa+ +o} Forexample, suppose we computed the standard deviation of demand tobe 10 units per day. If our lead time to get an order is five days, the standard deviation for the five-day period, because each day can be considered independent, is ps8) ° 05 = YOO + UO? COP + 10) + CO} = 22.36 Next we need to find z, the number of standard deviations of safety stock, ‘Suppose we wanted our probability of not stocking out during the lead time 1 be 95. The

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