ISQA 479

1
ISQA 479

• Inventory
• Network Configuration
• Facilities Planning

2
Warehouse Requirements

• Forecast Customer Demand
• Dollar Value
• Number of SKUs
• Individual SKU
• Volume
• Variability
• Service Level Requirements
• Replenishment Lead Time
• To the Customer (Outbound)
• To the Warehouse (Inbound)

3
Logistics Network Configuration

• Network Planning
• Total Demand
• Forecasts of Future Demand
• Location of Customers
• Location of Suppliers
• Number of Facilities
• Locations of Facilities
• Logistics Requirements

4
U.S. Population Distribution
5
Oregon Population Distribution
6
National Highway System
7
Rail Lines
8
Demand and Inventory Forecasting

• If No Variability
• No Inventory
• Sequence Production to Demand
• Variability
• Customer Demand
• Product Life Cycle
• Supply Lead Times
• Competition
• Scale Economies
• Production
• Transportation
• Forecasting Model

9
Types of Firms Manufacturing

• Make To Stock
• Standard PRODUCTS
• Made in ANTICIPATION of Demand
• Assemble To Order
• Standard COMPONENTS
• Custom Assembled AFTER Receipt of Order
• Make To Order
• Standard PRODUCT Made AFTER Receipt of Order
• Make Parts to Customers Specifications
• Engineer To Order
• Custom Design and Build

10
Impacts of Firm Type on Inventory

• Make to Stock
• Assemble to Order
• Make to Order
• Engineer to Order

11
Logistics Modeling

• Demand Data
• Volumes
• Customer Locations
• Supply Data
• Volumes
• Supplier Locations
• Comparative Freight Rates, Facility Costs, Labor
  Costs, Tax Considerations

12
Logistics Modeling

• Customer Focused Locations (Market-Positioned)
• Supplier Focused Locations (Production-Positioned)
  
• Intermediate Locations (Intermediate-Positioned)

13
Facility Location Decisions

• Center of Gravity Method
• Create a Grid for Operating Area
• Volume X Horiz Grid Number for Each Location
• Volume X Vert Grid Number for Each Location
• Sum Horiz
• Sum Vert
• Sum Total Volume
• Vert Total / Total Volume
• Horiz Total / Total Volume

14
Risk Pooling

• Demand Variability Reduces as Demand Aggregated
  Across Locations
• Impacts on Safety Stock?
• Impacts of Different Market Positive Correlation?

15
Logistics Facility Planning Goals

• Customer Service at Specified Levels
• Defines Inventory Levels
• Minimum Total System Cost
• Inventory Investment
• Inbound Logistics
• Outbound Logistics
• Facility Costs
• Facility Operation Costs
• Potential for Growth
• Buy or Lease
• Incentives

16
Logistics Facility Requirements

• Ceiling Height
• Space Size and Shape
• Numbers of Dock Doors
• Degree of Automation
• Utilities
• Material Handling
• Office Space Requirements
• Other Special Requirements

17
Logistics Facility Planning

• Transportation Characteristics
• Miles to Freeway, Airport, etc.
• Congestion
• Rail or Other Access
• Labor Force Availability
• Support Services

18
Logistics Facility Planning

• Taxation
• Union Activity
• Zoning
• Environmental Impacts
• Incentives
• Facility Modifications

19
Warehouse Operating Considerations

• Minimize Picking Costs Errors
• Issue In Standard Quantities
• (Minimizes Counting)
• Separate Similar Products
• Minimize Picker Travel
• Take Inventory to Picker
• Order Batching

20
Warehouse Operating Costs

• Shipping 15
• Receiving 15
• Storage 20
• Order Picking 50

21
Bullwhip Effect and Panic Buying
22
Great Inventory Correction