Professional Documents
Culture Documents
3
BITS Pilani, Pilani Campus
Supply Chain Management
BITS Pilani
Pilani | Dubai | Goa | Hyderabad
Topics
The Bullwhip Effect
time
3 4
Operational obstacles
Pricing obstacles
Behavioral obstacles
Incentive obstacles
Incentives of participants are in conflict
Participants maximize own benefits
Sales force incentives
Operational obstacles
Ordering in large lots
Large replenishment lead times
Rationing and shortage gaming
Pricing obstacles
Lot-size based quantity decisions
Price fluctuations
Behavioral obstacles
Stabilize pricing
Basics of Inventory
Cycle Inventory
EOQ Formula
EOQ Example
Basics of Inventory
Inventory-1
Types of inventory
• Raw materials – not yet entered into the production process
• Work-in-Progress (WIP) – not yet finished
• Finished goods – not yet sold
Receipts,
Q
Retailer’s
Inventory
Sales
Cycle Inventory
Cycle Inventory
Receipts
Sales
Lot size = Q
lot size Q
Cycle inventory = =
2 2
Order Order
Quantity, Q Quantity, Q
Sales Sales
rate, D rate, D
Inventory Inventory
Ordering cost
Buyer time- people in purchase department
Cost of transportation, receiving, inspection, testing, data entry, payment,
etc.