PRODUCTION AND OPERATIONS MANAGEMENT

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Presentation transcript:

PRODUCTION AND OPERATIONS MANAGEMENT Ch.13: Inventory Management SUMMARY POM - J. Galván

BASIC POINTS HOW SHOULD WE MANAGE STORED PRODUCTS AND PARTS? Definition of inventories, types and control Costs Holding Ordering Setup Management models: Fixed order or period EOQ, POQ, Quantity discount POM - J. Galván

QUESTIONS Discuss the advantages and disadvantages of maintaining large amounts of inventory. What is economic order quantity? What are the assumptions of EOQ? If the annual demand for a product is 3,50,000 units. The annual carrying cost rate is 25 percent of the cost of the unit the product costs Rs 14.75 per unit to purchase, and each time the product is ordered the related ordering cost is Rs 53.00. i) What is EOQ? ii) What is total cost at EOQ? iii) How much would be the total cost if the order quantity is 2500 units due to standard packing? POM - J. Galván

QUESTIONS (II) The planning and scheduling of production only against specific production order is Make-to-Stock Make-to-Order Assemble-to-Order Mass Customization Mohan is a confectioner. He buy plastic boxes in bulk and uses them to pack his chocolates. His annual requirement of boxes is 1,200 and each box costs Rs.30.The ordering costs are Rs.10 per order and carrying costs are 20%. How many boxes should he order at a time so as to minimize the costs? The supplier of boxes offers the following price breaks: Order Quantity Price (Rs./Box) Less than 100: 30.00; 100-199: 29.60; 200 and above 29.75 What should be the order quantity?

QUESTIONS (III) The raw materials, components, completed or partially completed products, and pieces of equipment a firm uses are often referred to as inventory. order quantities. production. outputs. Procurement is another name for? Consumption Disposition Budgeting purchasing

What if Let’s try to optimize the amount of groceries that you store at home What are the costs involved? Is there an optimum amount of goods to be stored? NOTE: You order goods going to a grocery that takes you an hour to reach You have a cupboard in your kitchen that can hold only 10 Kgs. of goods POM - J. Galván

CAN YOU IMAGINE A LIFE WITHOUT ENGINEERS? WELL, JUST SEE: POM - J. Galván

POM - J. Galván

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Watch what you have POM - J. Galván

What if Let’s try to optimize the amount of groceries that you store in your larder What are the costs involved? Is there an optimum amount of goods to be stored? NOTE: You order goods going to a grocery that takes you an hour to reach You have a cupboard in your kitchen that can hold only 10 Kgs. of goods POM - J. Galván