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STORES FUNCTIONS 1.RECEIPT 2.STORAGE 3.RETRIEVAL 4.ISSUE 5.RECORD KEEPING 6.HOUSE KEEPING

STORES FUNCTIONS 1.RECEIPT 2.STORAGE 3.RETRIEVAL 4.ISSUE 5.RECORD KEEPING 6.HOUSE KEEPING 7.SURPLUS MANAGEMENT 8.VERIFICATION 9.COORDINATION. TYPES OF STORES. 1.CENTRALISED 2.DECENTRALISED. IDENTIFICATION OF ITEMS (CODIFICATION). 1.ALPHABETICAL 2.ALPHA-NUMERICAL 3.NUMERICAL

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STORES FUNCTIONS 1.RECEIPT 2.STORAGE 3.RETRIEVAL 4.ISSUE 5.RECORD KEEPING 6.HOUSE KEEPING

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  1. STORES FUNCTIONS 1.RECEIPT 2.STORAGE 3.RETRIEVAL 4.ISSUE 5.RECORD KEEPING 6.HOUSE KEEPING 7.SURPLUS MANAGEMENT 8.VERIFICATION 9.COORDINATION

  2. TYPES OF STORES • 1.CENTRALISED • 2.DECENTRALISED

  3. IDENTIFICATION OF ITEMS(CODIFICATION) • 1.ALPHABETICAL • 2.ALPHA-NUMERICAL • 3.NUMERICAL • 4.COLOUR CODES • 5.BAR CODES

  4. STORAGE SYSTEMS • 1.CLOSED STORE SYSTEM • 2.OPEN STORE SYSTEM

  5. STORES RECORDS • 1. BIN CARDS • 2. STORES LEDGER

  6. STORES ACCOUNTING • FIFO • LIFO • AVERAGE COST • MARKET VALUE • STANDARD COST SYSTEM

  7. STOCK VERIFICATION • ANNUAL VERIFICATION • CONTINOUS STOCK VERIFICATION • LOW POINT VERIFICATION

  8. STORES EQUIPMENTS • BINS • TRAYS • DRUMS • BARRELS • SHELVES • RACKS • PALLETS

  9. MATERIAL HANDLING EQUIPMENTS • TROLLEYS • FORK-LIFT TRUCKS • HOISTS • MONORAIL • BELT CONVEYOR • ROLLER CONVEYOR • CRANES

  10. STANDARDISATION • STANDARDISATION HELPS IN • 1.REDUCING INVENTORY • 2.INTERCHANGEABILITY

  11. Economic-Order-Quantity Decision Model Example 10,000 8,000 Annual relevant total costs Relevant Total Costs (Dollars) 6,000 5,434 Annual relevant ordering costs 4,000 Annual relevant carrying costs 2,000 600 988 EOQ 1,200 1,800 2,400 Order Quantity (Units) 20 - 15

  12. Reorder Point 988 Reorder Point Reorder Point 494 Weeks 1 2 3 4 5 6 7 8 Lead Time 2 weeks Lead Time 2 weeks This exhibit assumes that demand and purchase-order lead time are certain: Demand = 247 tape packages/week Purchase-order lead time = 2 weeks 20 - 17

  13. When to Reorder with EOQ Ordering • Reorder Point - When the quantity on hand of an item drops to this amount, the item is reordered • Safety Stock - Stock that is held in excess of expected demand due to variable demand rate and/or lead time. • Service Level - Probability that demand will not exceed supply during lead time.

  14. Determinants of the Reorder Point • The rate of demand • The lead time • Demand and/or lead time variability • Stockout risk (safety stock)

  15. Quantity Maximum probable demand during lead time Expected demand during lead time ROP Safety stock Time LT Safety Stock Figure 11.12 Safety stock reduces risk of stockout during lead time

  16. Service level Risk of a stockout Probability of no stockout Quantity ROP Expected demand Safety stock 0 z z-scale Reorder Point Figure 11.13 The ROP based on a normal Distribution of lead time demand

  17. Safety Stock Example Safety stock is inventory held at all times regardless of the quantity of inventory ordered using the EOQ model. Video’s expected demand is 247 packages per week. Management feels that a maximum demand of 350 packages per week may occur.

  18. Safety Stock Example How much safety stock should be carried? 350 Maximum demand – 247 Expected demand = 103 Excess demand per week 103 packages × 2 weeks lead time = 206 packages of safety stock.

  19. Just-In-Time Purchasing Just-in-time (JIT) purchasing is the purchase of goods or materials such that a delivery immediately precedes demand or use. Companies moving toward JIT purchasing argue that the cost of carrying inventories (parameter C in the EOQ model) has been dramatically underestimated in the past.

  20. JIT Purchasing and EOQModel Parameters The cost of placing a purchase order (parameter P in the EOQ model) is also being re-evaluated. Three factors are causing sizable reduction in the cost of placing a purchase order (P). 1. Companies increasingly are establishing long-run purchasing arrangements.

  21. JIT Purchasing and EOQModel Parameters 2. Companies are using electronic links, such as the Internet, to place purchase orders. 3. Companies are increasing the use of purchase order cards (similar to consumer credit cards like Visa and Master Card).

  22. Just-In-Time Production Systems Just-in-time (JIT) production systems take a “demand pull” approach in which goods are only manufactured to satisfy customer orders.

  23. Major Features of a JIT System 1. Organizing production in manufacturing cells 2. Hiring and retaining multi-skilled workers 3. Emphasizing total quality management 4. Reducing manufacturing lead time and setup time 5. Building strong supplier relationships

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