Chapter 6 Inventory Management

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Chapter 6 Inventory Management

• Aj-Kulachatr C. Na Ayudhya
• Naresuan University
• Payao Campus
• Semester 1/50

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Inventory Management

• ?????????????????????
• ??????????????? ???????????????
  ??????????????????????????????????????????????????
  ??????????????????????????????????
  ??????????????????????????????????????????????????
  ????????? ??????????????????? (Sunk Cost)
  ??????????????????????????????????????????????????
  ???? (Shortage Cost)
• ?????????? ??????????????????????????????????????
  ?????????????????????????????????????????????
  ??????????????????????????????????????????
  ??????????? ???????????? ???????????????
  ??????????????????????????????????????????????????
  ?????????????????? (Economic Quantity Order)

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Inventory Management

• ?????????????????????
• ???????????? (Inventory) ??????????
• ???????? (Raw Material)
• ????????????????? (Work in Process)
• ?????????????? (Maintenance/Repair/Operating
  Supplies)
• ??????????????? (Finished Goods)

WIP
Raw Material
Finish Goods
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Basic Decision for Inventory Management

• Financial Policy ? High Return
• Minimum stock for reduction of sunk cost
• Avoid risk of stock out cost
• Production Selling Policy
• Available of goods for produce and sales
• Maintain and keeping the stock
• Quantities of goods are correct
• Available of good and not to be damaged

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Cost of Inventory

• Item cost or Material cost
• Stock-out cost
• Ordering cost ? in case of purchasing
• Set up cost ? in case of self-producing
• Carrying cost or Holding cost
• Stock keeping area , Tax , wages , insurance ,
  interest , opportunity cost , etc.

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Economic Order Quantity EOQ

• Discovery by F.W.Harris on the hypothesis as
  below

• Ordering cost or Set Up cost
• ?????????????????????????? ??? ??????????????????
  ??????????????? ???????????????
• Carrying cost or Holding cost
• ??????????????????????????? ???
  ?????????????????????????????????
  ???????????????
• Shortage cost or opportunity cost
• ?????????????????????????????????????????????????
  ???????????????????????????????????????

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Inventory Model (EOQ Model)

• ???????????????????????????????? (Total Cost of
  Inventory) ??????????????????????? (Ordering
  Cost) ?????????????????????????????? (Holding
  Cost)
• Ordering Cost
• Demand (D)
• Order Quantity (Q)
• Set up cost (S)
• Ordering cost (O)
• Holding Cost
• Item cost (C)
• Interest (i)
• Inventory cost (I)

or
or
i x C I
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?????????????????????????????? EOQ

• ???????????????????????????????????????? ????
  ???????????????
• ????????????????? (Demand) ??????????????????
• ??????????????????????????????????? (No-shortage)
• ???????????????????????? (Lead-time) ?????
• ??????????????????????????????????????????
• ??????????????????????????????????????????????????
  ????????
• ?????????????????????? 1 ????
• ??????????????????????????????????????????????????
  ?????

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??????????????????????????????????????????????????
?
Quantity
R Reorder PointL Lead Time Q Order
Quantity
Q
R
Reorder Point
Time
Receiving Time
L
Reorder Time
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Inventory Model (EOQ Model)

• Total Cost Ordering Cost Holding Cost

Derivative 1st Order of TC
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EOQ Model
Order by purchasing
Order by producing
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Example 1

• The company has demand of raw material for
  producing 15,000 items per year , holding cost of
  production is 20 of its price and 4 of
  ordering per time. If unit cost is 0.15
  ,determine the EOQ and TC (please use excel for
  examine)

Q (Items) DO/Q iCQ/2 Total Cost
1,000 60.00 15.00 75.00
1,500 40.00 22.50 62.50
2,000 30.00 30.00 60.00
2,500 24.00 37.50 61.50
3,000 20.00 45.00 65.00
3,500 17.14 52.50 69.64
13
(No Transcript)
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?????? EOQ Model ????????
????????? ??? ????????????????????? (EOQ)
?????????????????????????????????????
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Reorder Point

• ???????????????? ???????????????????????????????
  ????????????????????????????????
  ??????????????????????????????????????????????????
  ?????? ? ??????????????????? ????????????????
  ???????????????????????

RP Reorder point L Lead Time d Usage of
goods / Day
From Example 1 if this plant work only 300 day /
year , the lead time in 5 day of transportation
,please examine Reorder point. Demand 15,000 /
year So, Usage / Day 15,000 / 300 50
Units RP 50 x 5 250 Units (Try it with Excel
QM QMWin)
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Exercise 1

• Set up cost of production is 10 per time and
  holding cost is 2 per item , If Unit cost of
  production is 10 and Demand of material per year
  is 1,000 item ,examine the value of EOQ and the
  others expenses and time to order

Exercise 2

• One of purchasing order is 5 per each , the
  production holding material cost is 12 of unit
  cost that is 20/item , If demand is 1,200 unit /
  month , please determine EOQ and the others
  expenses with time to order
• Lead time 3 days and working 360 days/year

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ABC Theory

• ???????????????????????? ABC ???
  ??????????????????????????????????????????????????
  ???????? ???????????????????????
  ?????????????????????????????????????
  ??????????????????????????????????????????????????
  ? ??????????????? 3 Class ???
• ??????????? A ?????????????????????????? 80
  ??????????????????????????????????????????????????
  ?? 20 ?????????????????????
• ??????????? B ?????????????????????????? 15
  ?????????????????????? ???????????????????????
  30 ???????????????
• ??????????? C ??????????????????????????????
  ?????? 5 ??????????????????????
  ?????????????????? 50 ?????????????????????

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ABC Diagram(Law of Significant few)
100
C 5
B 15
of Valuable (Dollar)
A 80
50
50-60
15-20
25-30
of Items
0
50
100
20
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Example2
Items Usage / Year Unit Price Value
1 5,000 1.50
2 1,500 8.00
3 10,000 10.50
4 6,000 2.00
5 7,500 0.50
6 6,000 13.60
7 5,000 0.75
8 4,500 1.25
9 7,000 2.50
10 3,000 2.00
Item A20,B30 Item A20,B30 Total 100.0
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Exercise3
Items Usage / Year Unit Price Value
1 15000 0.2
2 14000 3.0
3 1500 0.2
4 55000 0.1
5 2000 0.1
6 110000 0.2
7 7500 0.1
8 40000 0.1
9 3000 3.0
10 4000 0.2
Item A15,B25 Item A15,B25 Total 100.0
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Inventory Control Technique

• Max-Min Technique
• Min Level RP Safety Stock
• Max Level EOQ (Q/2)
• Barcode Technique
• RFID Technology

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Barcode Technique
Barcode ??????????????????????????????????????????
????????????? ??? ?????? ???? ?????? ???? ??
????????????? ????????????????????????????????????
????????????????? ???????????????????? ???????
?????? ???? Barcode ??????????????????????????????
????????????????????????????? ???????????? ???
???? ??? ??? ???????? ????????????????????????
(Scanner) ????????????????????????????????????????
??????????????????????????????????????????????????
???????????????? (Digital Signal)
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Barcode Technique

• 885 ?????????????
• 0088 ???????????????????????????
• 60801 ?????????? ??????????????? ???????
• 6 ??????????????????????????????????????????
  ??????????????????????????????????????????????????
  ???????? Digit Number

885 0088 6 0 801 6
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Barcode Technique
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Barcode Technique
Barcode Printer Barcode Software PDT
(Portable Data Terminal)
RFID Technology