Professional Documents
Culture Documents
Management
TYPES OF INVENTORY
Manufacturing inventory
FUNCTIONS UNDERLYING
INVENTORY COMMITMENTS
A. Geographical Specialization :
- production facilities located near the source
of materials
- goods from various locations are collected at
a single warehouse and then combined as a
consolidated/ assorted shipment.
B. Decoupling :
-
D. Buffer Uncertainties :
Fair Share
allocation
Distribution
Requirement
Planning
Distribution
Centre-2
Distribution
Centre-3
Inventory= 50 units
Daily use= 10 units
Inventory= 75 units
Daily use= 15 units
DS = (A + Ij ) / Dj ,
-
where
DS= no. of days supply for distribution centre inventories.
A= inventory units to be allocated from the warehouse
Ij= inventory in units for distribution centre j.
Dj = daily demand for distribution centre j
where
- Aj = amount allocated to distribution centre j
- DS= number of days supply that each
distribution centre is brought upto.
- Ij = inventory in units for distribution centre j
- Dj= daily demand for distribution centre j
DISTRIBUTION REQUIREMENT
PLANNING
C USTOMERS
Distribution centre
Distribution
centre
Distribution
centre
Distribution Distribution
centre
centre
Regional warehouse
Distrib
ution
centre
Regional warehouse
Plant Warehouse
BENEFITS OF DRP
FORECAST APPROACHES
A. Top-Down Approach
B. Bottom-up Approach
ABC
Inventory
Controlitems
It separates
most significant
from
less important ones
Small number of items will have
significant
value
- 10 % of items account for 70 % of
total inventory
value
- 20 30 % items account for 20 % value
- 60-70 % items account for 10 % of
value
Order
Arrival
Average stocks
Inventor
y
Level
Reorder
stocks
Safety
stocks
0
20
60
40
Days
EOQ Model
Q=
2 DS
HC