Inventory Concepts 库存概念 Chapter 4 Hu Xiongying, Lecturer The Wuhan Institute of Technology

COST TRADEOFFS REQUIRED IN MARKETING AND LOGISTICS Marketing Objective: Allocate resources to the marketing mix in such a manner as to maximize the long-term profitability of the firm. Logistics Objective: Minimize Total Costs given the customer service objective where total costs = Transportation Costs + Warehousing Costs + Order Processing and Information Costs + Lot Quantity Costs + Inventory Carrying Costs

INVENTORY PIPELINE 库存管道

WHY IS IT NECESSARY TO HAVE INVENTORIES? 为什么持有库存 To achieve transportation economies To achieve production economies To take advantage of quantity purchase discounts To maintain a source of supply To support the firm’s customer service policies To meet changing market conditions (e.g., Seasonality, demand fluctuations, competition) To overcome time and space differentials that exist between producers and consumers To accomplish least total logistics commensurate with a desired level of customer service

Basic Reasons to Hold Inventory 持有库存的基本原因 Buffer against uncertainty in: Demand Supply Delivery Safety stock is the principal inventory tool to address uncertainty

Basic Reasons to Hold Inventory (cont.) 持有库存的基本原因（续） Provide scale economies in: Procurement Production Transportation Cycle stock is used to take advantage of scale economies.

Other Reasons for Holding Inventory 持有库存的其他原因 Supply and demand cannot be perfectly matched (uncertainty & production lots) Customer service through positioning and availability Anticipation--fertilizer and seasonal items Decoupling of: production and supply production and finished goods

Inventory Categories 库存类型 Cycle (“working”) stock Safety stock Anticipation (“build”) stock Intransit (“pipeline”) stock Decoupling (“peace-keeper”) stock Shadow (“phantom”) stock

Dimensions of Inventory Models 库存模型的分类 Deterministic versus Stochastic Indefinite versus finite planning horizon Independent versus dependent demand Single versus multiple: item location echelon (interrelated locations) indenture (interrelated items) Echelon n.[军]梯形, 梯阵, 梯次编队 vt.排成梯队 vi.排成梯队 Indenture n.契约

Relevant Inventory Costs 相关的库存成本 Purchase cost of the item Volume discounts Temporary discounts Ordering or purchasing costs Administrative purchasing costs Manufacturing setup costs

Costs Included in Inventory Models 用于库存模型中的成本 Holding or inventory carrying costs capital costs service costs storage costs risk costs Shortage costs backorder costs lost sales costs lost customer costs back order 留待将来交付的订货,未交清订货,未完成的订货,延迟交货，延期交货,再订货

What level of customer service? Where should stock be (location) INVENTORY MANAGEMENT ANSWERS SEVERAL IMPORTANT STRATEGIC QUESTIONS 库存管理回答的几个重要战略问题 What level of customer service? Where should stock be (location) What items to stock? (range) How much of each item to stock? (depth)

INVENTORY MANAGEMENT ANSWERS FOUR IMPORTANT TACTICAL QUESTIONS 库存管理回答的四个重要战术问题 How to order? When to order? What to order? How much to order?

THE EFFECT OF REORDER QUANTITY ON AVERAGE INVENTORY INVESTMENT WITH CONSTANT DEMAND AND LEAD TIME 需求和前置期稳定的前提下，再订货量对平均库存投资的影响

THE EFFECT OF REORDER QUANTITY ON AVERAGE INVENTORY INVESTMENT WITH CONSTANT DEMAND AND LEAD TIME 需求和前置期稳定的前提下，再订货量对平均库存投资的影响

THE EFFECT OF REORDER QUANTITY ON AVERAGE INVENTORY INVESTMENT WITH CONSTANT DEMAND AND LEAD TIME 需求和前置期稳定的前提下，再订货量对平均库存投资的影响

AVERAGE INVENTORY INVESTMENT UNDER CONDITIONS OF UNCERTAINTY 不确定情况下的平均库存投资

AVERAGE INVENTORY INVESTMENT UNDER CONDITIONS OF UNCERTAINTY 不确定情况下的平均库存投资

AVERAGE INVENTORY INVESTMENT UNDER CONDITIONS OF UNCERTAINTY 不确定情况下的平均库存投资

Wilson’s* Economic Order Quantity (EOQ) 经济订购批量

Wilson’s Economic Order Quantity (EOQ) 经济订购批量

Wilson’s Economic Order Quantity (EOQ) 经济订购批量

Relevant Costs in EOQ EOQ的相关成本 Holding or Carrying cost (C) Ordering cost (P) Purchase cost of the item (V)

THE EOQ MODEL EOQ模型

COST TRADE-OFFS REQUIRED TO DETERMINE THE MOST ECONOMIC ORDER QUANTITY 确定最经济的订货批量所需的成本权衡

AN EOQ MODEL EXAMPLE (The hard Way)

COST TRADE-OFFS REQUIRED TO DETERMINE AN ECONOMIC ORDER QUANTITY By Trial & Error (a.k.a “Brute Force”) 决定最经济订货批量所需的成本权衡

The Easy & Exact Way

ASSUMPTIONS OF THE SIMPLE EOQ MODEL 简单EOQ模型的假设 A continuous, constant, and known rate of demand. A constant and known replenishment cycle or lead time. A constant purchase price that is independent of the order quantity or time. A constant transportation cost that is independent of the order quantity or time. The satisfaction of all demand (no stock-outs are permitted). No inventory intransit. Only one item in inventory, or at least no interaction among items. An infinite planning horizon. No limit on capital availability.

RELATIONSHIP BETWEEN INVENTORY INVESTMENT AND CUSTOMER SERVICE LEVELS 库存投资和客户服务水平之间的关系

PITFALLS OF INVENTORY CONTROL 库存控制的缺陷 Control by edict No one person is responsible The fallacy of 100% safety stock protection The “Who needs a forecast?” attitude

WEIGHTED CUSTOMER SERVICE LEVELS USING ABC ANALYSIS 应用ABC分析法加权客户服务水平

TIME-BASED COMPETITION 基于时间的竞争 Enhances customer value Reduce inventory investment Improves profitability Responds to changing market needs Provides competitive/differential advantage Eliminates "cost added"/duplicate functions

TOTAL SUPPLY CHAIN INVENTORY 总供应链库存

Logistics questions regarding inventory 有关库存的物流问题 What level of customer service is required? What level of disrupted service is acceptable? How centralized an operation? What is cost of a wrong decision? How sophisticated an inventory system is required?

Variables considered by the logistics manager 物流经理考虑的变量

FACTORS INFLUENCING SAFETY STOCKS 影响安全库存的因素 Forecast error Exposure to stock-out Lead time Service level requirements

Some Safety Stock Strategies 一些安全库存策略 Specified fill rate (demand filled from stock) or Specified service level (probability a stock-out will not occur) Maximize $ demand filled from a given investment. Set SS based on specified number of Sigmas (Std.Dev., MAD, etc.)

Some Safety Stock Strategies (cont.) 一些安全库存策略（续） Set SS based on specified time supply. Minimize shortage occurrences for a given investment (# of orders with a problem.) Minimize transaction shortages for a given investment (# of problems in orders.) Materials Management Systems; R.G. Brown 1977, Pg. 178