inventory policy and reorder point analysis kelley bessette john johnson jeff litchfield matt riskin
TRANSCRIPT
Inventory Policy and Reorder Point Analysis
KELLEY BESSETTEJOHN JOHNSONJEFF LITCHFIELD
MATT RISKIN
Branches/Demand Centers
Finished Cores
Component Rebuild Centre
Work in Process
Old Cores
DC DC DC DC DC
Finished Cores CRC
Work in Process
Old Cores
DC DC DC DC DC
Branch – a node in the network Demand Centre – any node in the network with demand over a critical number (5) parts per year
These centres do carry inventory
Branches/Demand Centers
Finished Cores CRC
Work in Process
Old Cores
DC DC DC DC DC
Services the branches, and carries inventory for nodes with sales less than a critical value
Branches/Demand Centers
Finished Cores
Work in Process
Old Cores
DC DC DC DC DC
CRC
This facility is located in Edmonton, and is responsible for refurbishing used cores
Component Rebuild Centre
Branches/Demand Centers
Finished Cores
CRC
Work in Process
Old Cores
DC DC DC DC DC
Demand Centres
Finished Cores
CRC
Work in Process
Old Cores
45
Finished Cores
CRC
Work in Process
Old Cores
45
Simulation of demand
• A variation of Croston's Intermittent Method
Finished Cores
CRC
Work in Process
Old Cores
45
Returning Cores
• Assign return time
• Update return time daily on a basis
Demand Centres
CRC
Work in Process
Old Cores
45Refurbishing
• Assign processing time
• Track cores in process
Demand Centres
Finished Cores
CRC
Work in Process
Old Cores
45
Distribution
• Where finished cores go
• Lead Time
• Track Cores en-route
Where to locate inventory Branch versus Distribution Centre
Re-order point at each demand centres/distribution centres
Number of cores in system
Outputs of Model
Model Run ResultsPart Number: 6V5227
Store Number: 10
Costs Vs. Re-Order Point
02000400060008000
10000120001400016000
1 2 3 4 5 6 7 8 9
Re-Order Point
Co
st
($)
0
0.2
0.4
0.6
0.8
1
1.2
Fill
Ra
te (
%)
Holding Costs Lost Contribution Total Cost Fill Rate
Potential Savings and Improvements
Finished Goods Inventory Cost Savings
0%
20%
40%
60%
80%
100%
1153306 1W1695 2W8005 6V5227
Part Number
Perc
enta
ge
Savi
ngs
Project Accomplishments
Development of a product that can be applied to 900 parts
Simulating time event in Excel
Model construction and implementation in a three month period
Questions?(Model Preview)