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L#8 Inventory Control
Fichas del conjunto (19)
- 1What is inventory or stock? (1)The stored accumulation of material resources (1)
- 2What are the reasons for the existence of inventories? Give an example of each (5)1. Supporting quality (aged Cognac)
2. Supporting speed of operation (Blood bank)
3. Supporting dependability (Protection against warehouse fires)
4. Supporting flexibility (Custom dell computers)
5. Supporting cost objectives (Bulk buying fruits by cake factories in season) - 3Categorise inventories into 5 categories. Explain each (5)1. Buffer inventory to compensate for fluctuations in supply and demand, also called safety inventory
2. Cycle inventory occurs when one or more stages in the process cannot supply all the items simultaneously. It is therefore necessary to run the process for several cycles to produce the entire range of products. Thus, output from various cycles need to be stored to offer the full range of outputs
3. De-coupling inventory is required in de-coupling to allow two processes to proceed at various speeds, independently from each other
4. Anticipation inventory is the inventory that is stored to cope with predictable fluctuations in seasonal demand.
5. Pipeline inventory exists due to the fact that a delivery is not instantaneous. The material is considered to be in pipeline inventory between the time that it is allocated for delivery to the time that it gets delivered and becomes available for the use of the next stage - 4What are the three major decision in day-to-day inventory management? (3)1. How much to order (The volume decision)
2. When to order (The time decision)
3. How to control the system (The control system) - 5Explain what the volume decision is (1)Finding the order volume that achieves the balance between order costs and storage costs (1)
- 6What are the features of the economic order quantity (EOQ)? (4)1. A simple model to determine order size
2. Demand rate is assumed to be constant
3. Assumed stock is replaced instantaneously after an order is placed
4. Order cost is assumed independent of order size - 7Draw a graph for EOC showing all key features (1)See notes
- 8What is the average inventory for EOQ? Why? (2)1. Q/2
2. Because the two shaded areas in the figure are equal - 9Give the 5 equations for EOQ and draw plots of costs against order quantity for: Total costs, holding costs, order costs and EOQSee notes
- 10What does economic batch quantity assume? (2)1. Deliveries are not instantaneous and are carried out a constant rate
2. Demand is assumed to be depleting the inventory at a constant rate - 11Draw the graph for economic batch quantity, and derive the two relevant equations (1)See notes
- 12What are the two approaches for determining the time to order?1. Re-Order Point (ROP)
2. Re-Order Level (ROL) - 13Explain what the 'Re-Order point' is (1)The point in time at which more items are ordered, usually calculated to ensure that inventory does not run out before the next batch of deliveries arrives (1)
- 14Explain what the 'Re-order level' is (1)The level of inventory at which more items are ordered, usually calculated to ensure that inventory does not run out before the next batch of inventory arrives (1)
- 15Draw a plot to show the differences between re-order point and re-order level (1)See notes
- 16What are the two approaches for the control decision. Give advantages/disadvantages for each and draw a plot to illustrate each (6)1. CONTINUOUS monitoring (1) of inventory allows orders to be made for the EOQ but the order periods are irregular (1)
2. The simpler PERIODIC approach (1) requires the inventory to be reviews in fixed time period and orders made accordingly. (1) This approach loses the advantage of being able to order the EOQ (but the EOQ can be used to determine a good period for ordering by calculating EOQ/D) (1)
See notes for 2 diagrams (2) - 17Explain what two-bin inventory control is (6)1. Two bin ordering is usually used in continuous review inventory systems to ensure smooth operations.
2. In this approach, the inventory is divided into two bins, one containing the items that are being used and the other the ROL and an additional safety invetory
3. When the first bin is empty, the order is made
4. During the lead-time the second bin is used
5. Sometimes the safety inventory is put into a seperate bin to create a three-bin system.
6. These systems are excellent at showing when the ordering system for a component need to be reviews - 18Explain what ABC inventory control is (9)1. an approach to inventory control that classes inventory by its usage value and varies the approach to manage it accordingly
2. Generally, a relatively small proportion of the total range of items contained in an inventory will account for a large proportion of the total usage value
3. This phenomenon is known as the Pareto law, sometimes referred to as the 80/20 rule.
4. It is called this because, typically, 80 % of an operations sales are accounted for by only 20 percent of all stocked item types.
5. Here the relationship can be used to classify the different types of items kept in an inventory by their usage value.
6. ABC inventory control allows inventory managers to concentrate their efforts on the more significant items of stock
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a. Class A items are those 20 per cent or so of high-usage values items which account for around 80 percent of the total usage value
b. Class B items are those of medium-usage value, ususally the next 30 per cent of items that often account for around 10 per cent of the total usage value
c. Class C items are those low-usage value items which, although comprising around 50 percent of the total types od items stocked, probabaly account for only around 10 percent of the total usage value of the operation
8. Generally great care is taken in the control of Class A items and and EOQ calculations or similar methods are used to minimise their costs.
9. Class B and C items, on the other hand are usually managed by two-bin control or simple pull control - 19Give and explain the three approaches that are used to measure stored inventory in an operation (3)1. MONETARY VALUE: Most simple method, in lean manufacturing it is often a goal to reduce this value
2. STOCK COVER: alternative method, usually used in push control which indicates how long the items stored in the inventory will last for under normal operating conditions
3. STOCK COVER: measures the number of times that the stock would be completely depleted over a period of time (usually a year) at the normal rate of operation
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- Manufacturing Operations and Technology Fichas sobre L#8 Inventory Control, creado por Block el 01/05/2014.
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- Block
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