Discussion Board

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

OPERATIONS MANAGEMENT

8th edition

Chapter 13

Inventory management

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.1

This chapter examines inventory management

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

In Chapter 13 – Inventory management – Slack et al.

identify the following key questions…

 What is inventory?

 Why should there be any inventory?

 How much to order? The volume decision

 When to place an order? The timing decision

 How can inventory be controlled?

Key questions

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Inventory management

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Table 13.2

Some reasons to avoid inventories

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Table 13.3

Some ways in which physical inventory may be

reduced (1 of 2)

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Table 13.3

Some ways in which physical inventory may be

reduced (2 of 2)

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.4

Inventory management has a significant effect

on return on assets

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.5

Inventory profiles chart the variation in

inventory level

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.6

Two alternative inventory plans with different

order quantities (Q)

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Traditional view of inventory-related costs

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.3

Cycle inventory in a bakery

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.8

Inventory profile for gradual replacement of

inventory

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.10

Re-order level (ROL) and re-order point (ROP)

are derived from the order lead time and

demand rate

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.11

Safety stock (s) helps to avoid stockouts when

demand and/or order lead time are uncertain

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.12

The probability distributions for order lead time and

demand rate combine to give the lead-time usage

distribution

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.13

A periodic review approach to order timing with

probabilistic demand and lead time

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.15

Pareto curve for items in a warehouse

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Class A items – the

20 per cent or so of

high-value items

which account for

around 80 per cent of

the total stock value

Class B items – the

next 30 per cent or

so of medium-value

items which account

for around 10 per

cent of the total stock

value

Class C items –

the remaining

50 per cent or so of

low-value items

which account for

around the last 10

per cent of the total

stock value

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Criticism of the EOQ approach

Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved

Figure 13.14

The two-bin and three-bin systems of

re-ordering