facilities planning ise310l session 7 september 15, 2015 geza p. bottlik page 1 outline questions?...
TRANSCRIPT
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 1
Outline
• Questions?
• Inventory experiences?
• Background quiz results
• Questionnaire results
• Team Questionnaire Results
• Newspaper Problem
• Uneven demand
– Lot for lot, Least Unit Cost, Part-Period Balancing, Silver-Meal
• Quiz on Thursday
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 2
Background Quiz Results
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 3
Questionnaire Results
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 4
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 5
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 6
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 7
Newspaper problem
• Newspaper person’s cost = $0.25, no salvage value
• Profit on a paper = $0.50
• Estimated average sales = 60
• Estimated standard deviation of sales = 5
• Percentage (Service level) = 0.50/(0.50+0.25) = .667
• NORMINV(0.667, 60, 5) = 63 or Q= average + z(std. dev)
• If the overage cost is lower than the shortage cost we order more than the average
• Underage cost = lost profit = Selling price – Cost
• Overage cost = Excess unsalvageable inventory = Cost – salvage value
• Service level = Underage cost/ (Underage + overage cost)
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 8
The newspaper problem
• Expected Profit at Q = 62: $28.64
• Expected Profit at Q = 63: $28.62
• The formula for expected profit comes from the probability of
demand being less or more than the order quantity
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 9
The newspaper problem
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 10
The newspaper problem
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 11
Uneven demand
• But what should we do if the demand pattern is not constant?
• Example:
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 12
Lot for Lot (LforL)
• We order the exact amount for each period’s demand
– No inventory cost
– Ordering cost for each period
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 13
Least Unit Cost (LUC)
• Add the order cost to the carrying cost of adding succeeding
periods’ demand and divide by the total units ordered.
• As long as this result continues to decrease, we keep adding
the demands to the amount ordered
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 14
Part Period Balancing
• This method sets the order horizon equal to the number of
periods that most closely matches the total holding cost with
the setup cost
• Economic Part Period (EPP)=Order Cost/Carrying rate*value
= A/kC
• Part Period (PP) = parts*periods stored
• We keep increasing the order quantity by the next period’s
demand as long the cumulative part-Periods do not exceed
the EPP
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 15
Silver-Meal heuristic
• Similar to Least unit cost, except we compare the average
cost per period
FACILITIES PLANNING ISE310LSESSION 7
September 15, 2015
Geza P. Bottlik Page 16
EOQ
• Calculate the EOQ using the total demand over the number
of periods for which you demand
• Adjust the carrying for the total periods
• Accumulate demand until it approaches the EOQ (or is
closest to it)