A COMPUTER-AIDED INVENTORY MANAGEMENT SYSTEM – PART 2
A computer-aided inventory management system – part 2:
inventory level control
C. Y. D. Liu and Keith Ridgway Reviews products on hand policies and lot-sizing associated with a reducing tool maker
Partly 1 of the article the design and development of a computer-aided inventory management system (CAIMS) was referred to. The CAIMS system originated for a trimming tool producer, PRESTO Equipment Ltd, Sheffield, with the goals of reducing inventory purchase and increasing productivity, customer-service level and plant performance. The CAIMS system consists of four modules incorporating analytical techniques for DASAR analysis, predicting, economic batch quantity calculations and the statistical calculation in the re-order level respectively. In this second portion of the article, several inventory plans and lot-sizing techniques will be reviewed as well as the analytical techniques used in the economic batch quantity (EBQ) and re-order level (ROL) modules are described.
review. In this case, the replenishment buy quantity is definitely variable and brings the stock into a predetermined level (S ). In the (s, S ) policy is similar to the re-order cycle plan but a variable renewal order is merely placed when the stock declines below a predetermined level (s). In the combined re-order level and re-order routine policy, renewal orders are put periodically then when the stock-on-hand falls below the re-order level. Replenishment requests placed when the re-order level is reached are of fixed size, but all those placed at the review happen to be variable. All these systems are closely related in that a predetermined amount of inventory, or period is set to trigger a set, or adjustable replenishment order. The key task is to decide accurately the parameters instructed to implement an effective inventory insurance plan, i. elizabeth. the renewal order volume and the re-order level. The calculation of both the re-order level and replenishment buy quantity is generally dealt with in isolation. Lewis suggested that for the best operation of any re-order level policy, both of these quantities ought to be calculated with each other as one directly influences the other. Lewis recommended a technique originally recommended by Tate. Tate's formula provides the advantage of staying relatively insensitive to significant variations in stockout costs. Lewis illustrated Tate's formula with an illustration, and indicated that the re-order level assessed using the joint calculation method was below that worked out to achieve the same service level using the independent calculation method. The joint calculation method is complicated, and it is difficult to examine whether this additional computational effort is very providing a general cost saving to the organization. Several writers including Prichard, Brown, and Ploss and Wight, have described the use of statistical techniques to compute the re-order level. This method has been adopted in the CATALOGO module increase in discussed afterwards. The creators wish to give thanks to the staff of PRESTO Tools Ltd, Sheffield for their support during the course of the project.
Products on hand policies
Lewis identifies two basic sort of inventory insurance plan. The first, in which decisions concerning replenishment are based on the amount of inventory organised, is known as re-order level coverage. The second depending on a circuit time, is recognized as reorder cycle policy. Within just these two types there are several alternatives including the re-order level plan with routine reviews, the (s, S) policy and the combined re-order level, and re-order cycle policy. In the re-order level policy, an order intended for replenishment is positioned when the stock-on-hand equals or perhaps falls beneath a fixed value, known as the re-order level. If a replenishment order is placed, the amount required is usually fixed. The amount of stock organised must be evaluated continuously. Inside the re-order cycle policy, the stock-on-hand is reviewed regularly and a...
References: 1 ) Liu, C. Y. D. and Ridgway, K., " A computer-aided inventory management – portion 1: forecasting”, Integrated Production Systems, Vol. 6 No . 1, 1995, pp. 12-21. 2 . Lewis, C. M., Scientific Inventory Control, Butterworths, London, 70. 3. Tate, T. W., " In defence from the economic batch quantity”, Operation Research, quarterly, Vol. 12-15 No . four, 1964, p. 329. four. Prichard, M. W., Contemporary Inventory Managing, John Wiley & Sons, New York, NEW YORK, 1965. your five. Brown, L. G., Decision Rules intended for Inventory Management, Holt Rhinehart and Winston, New York, NYC, 1967. six. Ploss, G. W. and Wight, Um. W., Production and Products on hand Control: Guidelines and Approaches, Prentice-Hall, Englewood Cliffs, NJ, 1967. several. Harris, Farreneheit. W., Procedure and Cost, Factory Management Series, A. W. Shaw, Chicago, ARIANNE, 1915. almost eight. Lockyer, T. G., Creation and Operation Management, sixth ed., Pitman Publishing, Greater london, 1989. being unfaithful. Saunders, G., " How to use a microcomputer simulation to determine order quantity”, Production and Inventory Management, Vol twenty-eight No . 5, New York, BIG APPLE, 1987, pp. 20-3. 12. Ptak, C. A., " A comparison of inventory types and carrying costs”, Creation and Inventory Management, Vol. 4 No . 29, Ny, NY, 1988. 11. Lewis, C. G., Scientific Inventory Control, subsequent ed., Butterworths, London, 1980.
The successful development of the EBQ module provides provided the organization with a medical and organized means of evaluating the most cost effective batch quantity to make across the entire product range. The sensitivity analysis demonstrates the fact that EBQ solution and the total cost equation are insensitive to suggestions errors. Modifications can be designed to the EBQ without sacrificing significant savings. This will prove to be within companies wherever costing data are not readily accessible. The EBQ module provides a stepping stone for more complex
C. Con. D. Liu is a Lecturer at the A language like german Singapore Commence, Jurong, Singapore, and Keith Ridgway is a Ibberson Mentor of Industrial Modify and Regeneration in the Department of Physical and Method Engineering, College or university of Sheffield, Sheffield, UK.