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Buyer-Supplier Relationships in the Lean Enterprise—Contracting
Published in Darren Dolcemascolo, Improving the Extended Value Stream, 2019
Max inventory level= Replenishment cycle stock + buffer stock + safety stock where Replenishment cycle stock = Replenishment cycle (days) x average usage/day. Replenishment cycle stock is based on the average usage over the replenishment cycle.Buffer stock = Confidence factor standard x deviation of daily usage replenishment cycle (in days). Buffer stock is the amount of extra stock that compensates for variation in daily usage on the factory floor.Safety stock = Safety percentage x (replenishment cycle stock + buffer stock). The safety percentage should be based on supplier reliability, quality, and delivery performance. The safety stock is the amount of extra stock that compensates for delivery or quality issues.
Supermarket Design
Published in Peter L. King, Lean for the Process Industries, 2019
Safety stock is inventory carried to prevent or reduce the frequency of stockouts, and thus provide better service to customers. Safety stock can be used to accommodate:Variability in customer demand or in demand from downstream process steps (where demand history is used to set cycle stock or order points)Forecast errors (where forecasts are used to set cycle stock targets or order points)Variability in supply lead timesVariability in supply quantity
Conclusions on Developing Non-Stock Production
Published in Shigeo Shingo, Andrew P. Dillon, Norman Bodek, A Study of the Toyota Production System From an Industrial Engineering Viewpoint, 2019
Shigeo Shingo, Andrew P. Dillon, Norman Bodek
In the past, stocks or inventory have been considered a “necessary evil,” with the emphasis on “necessary” and the “evil” thought to be inevitable and perhaps even useful. There are two types of stock: that which occurs naturally as the result of certain production practices, and “necessary” stock. Both are discussed below.
Optimal inventory replenishment policies for deteriorating items with preservation technology under the effect of advertisement and price reliant demand
Published in International Journal of Systems Science: Operations & Logistics, 2023
Sumit Maheshwari, Prerna Gautam, Amrina Kausar, Chandra K. Jaggi
In the most fundamental form, inventory management refers to the management of the stock in hand. Different kinds of items require different expertise for efficient handling. The deteriorating items require special care as they are perishable in nature and have fixed shelf lives. In order to fetch profits, proper spend management must be done by the decision-makers. In this regard, PTI is a viable decision to tackle the perishability issue of the stored items. Further, price and advertisement together become an important factor to alter the consumer's demand. In view of this, the current work attempts to bridge the research gap by developing an inventory replenishment model for deteriorating items that incorporates some pragmatic factors like price and advertisement-sensitive demand, deterioration, preservation technology investment, and carbon emissions.
An economic order quantity model with nonlinear holding cost, partial backlogging and ramp-type demand
Published in Engineering Optimization, 2018
Luis A. San-José, Joaquín Sicilia, Manuel González-de-la-Rosa, Jaime Febles-Acosta
As is well known, inventory theory develops the necessary methodology to determine optimal decisions on how much should be ordered and when a replenishment order should be placed. To do this, and in order to maximize their profits, business organizations must coordinate the functions of purchasing, manufacturing and distribution. Thus, in the organizational structure of enterprises, there exist several departments involved in inventory management, from the planning and marketing departments to the sales department, through departments of finance, purchasing, production, distribution, quality and customer support. For this reason, stocks have a high impact on the economic performance of the companies and, hence, adequate control of inventories is very important in order to manage business organizations efficiently.
Inventory cost framework for managing the petroleum product reorder point and order quantity policies
Published in Cogent Engineering, 2018
Stephen C. Nwanya, Chibuike K. Isi
Managing fuel cycle inventory in Nigeria is a worrisome decision problem for the retail service stations. In this study, cycle inventory is an inventory that results from cyclic ordering of stocks in batches. An inventory is a stock of any item or resource used in an organization. It represents a sizeable investment as well as a potential source of waste by firms, if not well managed. Thus, keeping a product in inventory is both regulatory and transformational to business functions, based on its use as a form of control strategy and to balance the flow of input and output, of a firm. Previous studies have established a strong relationship of a firm’s increased productivity with keeping of inventory (Isi, 2016; Nwanya, 2015). In view of the foregoing reasons, inventory is a serious function and requires strict attention by a firm’s management. Every organization including the petroleum industry, maintains some type of inventory systems. In Nigeria, the petroleum industry is critical to the economy to warrant efficient inventory policy and it consists of two streams, the upstream and downstream sectors. The upstream sector deals with acquisition and delivery of crude oil from wells to refineries, while the latter deals with manufacturing of petroleum products and distributing them to end-user customers (Jha, 2016) through approved channels. According to Eke and Enibe (2007), the distribution channels involve refineries, depots, tank farms and service stations. It is important to briefly describe how these channels are involved in inventory functions for the energy commodity (energy carrier).