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DSP Added Slides

DSP Added Slides. Session 1. Product A. MRP Technique. Bill Of Material Level. 0. 1. 1. 2. 2. 3. 4. 3. 5. 6. 4. 7. 8. 5. 9. The MRP Grid. PA1= 140 - 40 – 5 = 95. 1-11. TPOP Exercise. Technique. Order Quantity: 600 Fixed Safety Stock: 80 Fixed Allocated Qty: 0

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DSP Added Slides

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  1. DSP Added Slides Session 1

  2. Product A MRP Technique Bill Of Material Level 0 1 1 2 2 3 4 3 5 6 4 7 8 5 9

  3. The MRP Grid PA1= 140 - 40 – 5 = 95 1-11

  4. TPOP Exercise

  5. Technique Order Quantity: 600 Fixed Safety Stock: 80 Fixed Allocated Qty: 0 Lead-Time: 2 Weeks Low Level Code: 3 PERIODS 1 2 3 4 5 6 7 8 9 170 190 130 280 180 160 205 125 125 Gross Requirements 600 Scheduled Receipts 605 Projected Available 370 200 610 480 200 620 460 255 130 60 75 Net Requirements Planned Order Receipts 600 600 600 600 Planned Order Releases 2 weeks 130 280 160 205 125 DDLT 280 180 205 125 125 + SS 80 80 80 80 80 = TPOP 490 540 445 410 330 £ Is Projected Available TPOP (1) no yes (1) no no yes (1) (1) In any individual MRP replanning cycle, the TPOP is not considered in periods between order release and order receipt since the requirement for a scheduled or planned order receipt has already been satisfied. TPOP Solution With and Without MRP Grid Source: CPIM Inventory Management Certification Review Course (APICS, 1998). 1-22

  6. Average Size Inventory Average inventory = Q/2

  7. Order Quantity • If the order quantity (Q) increases • Annual cost of carrying increases • Annual cost of ordering decreases The economic order quantity occurs when the sum of these two costs is a minimum.

  8. Economic Order Quantity Demand = 2000 Cost to carry 30% Unit cost $ 10.00 Order cost $20.00 Calculate EOQ for Lot Sizes of 40 and 500

  9. EOQ Techniques • EOQ when costs are unknown and ordering item families • See page 269 Arnold • Constant K = 2S • i

  10. EOQ Derivation of Formula • Minimum costs when equal Carrying costs = Ordering costs Q x Ci = A x S Q 2 2Q 2Q x Q x Ci = A x S x Q 2 Ci Ci Q x Q = 2 x A x S Ci Q = 2 x A x S Ci

  11. EOQ Exercise Solution • Total Cost 1. 2. 3. 4. 1-37

  12. EOQ—Change in Carrying Cost • 2. • (25%-22%) / 25% is a 12% reduction in carrying cost to achieve a 6.6% increase in order quantity • (25%-15%) / 25% is a 40% reduction in carrying cost to achieve a 29.1% increase in order quantity • The order quantity increases in geometric proportion to reductions in carrying cost 1-38 Visual

  13. EOQ with Increased Annual Usage • 3. • (1,788-1,549) / 1549 is a 15.4% increase in order quantity based on a 33% (20,000-15,000) / 15,000 increase in annual usage • (3,098-1,549) / 1,549 is a 100% increase in order quantity based on a 300% (60,000-15,000) / 15,000 increase in annual usage • The order quantity increases in geometric proportion to increases in annual usage 1-39

  14. EOQ—Order Quantity 1,000 Units • 4. • 60% is too high for a carrying cost. Something in the area of 24% is more reasonable. • A high carrying cost cannot be used as an excuse for reducing the order quantity. 1-40 Visual

  15. Period Order Quantity – Before Order Technique Order Quantity: POQ EOQ = 650 Safety Stock: 0 Fixed Allocated Qty: 0 Lead-Time: 2 Periods Low Level Code: 2 PERIODS Gross Requirements Scheduled Receipts Projected Available Net Requirements Planned Order Receipts Planned Order Releases 1 2 3 4 5 6 7 • 8 130 160 120 260 130 120 185 230 0 0 0 370 240 80 510 250 120 0 0 0 40 260 130 120 Order Quantity = Sum of 4 periods = 40+260+130+120 = 550 Source: CPIM Inventory Management Certification Review Course (APICS, 1998).

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