ops ch6

price break inventory model

- discounted with larger order sizes

Inventory models

- fixed order quantity model - fixed time period model

inventory costs

- holding/carrying costs -setup costs -ordering costs -shortage costs

fixed time period models

- inventory counted only at particular times - generate quantities that vary from period to period, depending on usage rates - safety stocks must protect against stock outs - inventory is only counted at the time specified for review

ch11 inventory management

- stacks of money sitting while being transmitted - largest asset on the balance sheet at any time - difficult to convert back to cash - good idea to get your inventory done as low as possible - avg cost of inventory in US is 30-35% of its value

Product demand for end items comes primarily from two main sources:

-aggregate production plan - known customers who have placed specific orders

parts of material requirement planning

-bill of material - master production scheduele - inventory records

multi-period inventory models

-fixed order quantity is event triggered (running out of stock) also called EOQ, and Q model -fixed time period is time triggered (months sales call by sales representative) also called fixed order interval system, p modelx

purposes of inventory (6)

1. maintain independence of operations 2. meet variation in product demand 3. allow flexibility in production scheduling 4. provide safeguard for variation in raw material delivery time 5. take adv of economic purchase order size 6. domain specific reasons- anticipation in transit, strategic...

The first step in the MRP explosion process is?

Retrieve the gross requirements for end items from the master schedule.

Firms invest in lean manufacturing programs in order to

achieve high levels of customer service with low level of inventory investment

safety stock

amount of inventory carried in addition to the expected demand - safety stock can be determined based on many different criteria -better approach is to use probability - common approach is to keep certain number of weeks of supply needs to be kept in safety stock

inventory position

amount of on-hand order- back ordered quantities, if inventory is allocated for special purposes, the inventory position is reduced by these allocated amounts

assembly line

arranges processes according to a sequence of steps by which products are manufactured

The file containing the complete product description, parts listing, quantity needed and product build sequence is called?

bill of material

holding costs

cost for storage, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital

ordering cost

cost of placing an order and maintaining

storage costs

cost of stock out, backorder

setup costs

costs of obtaining necessary materials, arranging specific setups, filling out the required papers

allow preceding processes to operate independently

customer order decoupling point

independent demand

demands are unrelated to each other, ex: workstation may produce many parts that are unrelated but meet external demand requirements

A flexibleField 1Field 1 flexible , Correct Unavailable line

flexible line

inventory accuracy

how well inventory records agree with physical count

fixed time period model

item is ordered at certain intervals of time - counting takes place at end of period - has larger average inventory - favors less expensive items - sufficient for less important items - requires less time to maintain -less expensive to implement

groups machines to work on products that have similar processing requirements

manufacturing cell

uses dedicated areas for production of similar products.

manufacturing cell layout

dollar volume

measure of importance

dependent demand

need for 1 item is a direct result of the need for another item, ex: usually a higher level item of which it is apart

Workcenters are often focused on

one type of operation

lot sizes

part quantities issued in the planned order receipt and planned order release sections of an MRP schedule.

cycle counting

physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year

On an assembly-line, the order in which tasks must be performed is called the

precedence relationship

restrictions imposed by product design and technology

precedence relationship

what is a key diffenrce between fixed order quantity model where demand is known and unknown?

reorder point

ABC inventory classification

scheme that divides inventory into three groupings - high dollar volume A - moderate dollar volume B low dollar volume C

inventory system

set of policies and controls that monitor levels of inventory - determines what should be maintained, stock replenished, and how large orders should be

inventory

stock of an item or resource in an organization - includes: RM, FG, component parts, supplies, WIP

Patero Principle

the logic of the few having the greatest importance and the many having little importance

longest required task time often defines the shortest possible workstation cycle time for production.

true

standardization on the product process matrix refers to

variations in the product

fixed order quantity model

when we want to maintain an item "in stock" and when we resupply the item, a certain number must ordered - inventory must be continually monitored - has smaller average inventory - favors more expensive items - appropriate for more important items - requires more time to maintain- but is usually more automated - more expensive to implement

The time between successive units coming off the end of an assembly line is referred to as

workstation cycle time