Inventory Management and Risk Pooling Xiaohong Pang Automation Department Shanghai Jiaotong University
Inventory Management and Risk Pooling Xiaohong Pang Automation Department Shanghai Jiaotong University
Topics Today Introduction ·What is Inventory ·EOQ Model ● The Effect of Demand Single-Stage Uncertainty Inventory Control ·Single Period Models Initial Inventory
Topics Today
Introduction to Inventory Management The importance of inventory positioning and the need for the coordination of inventory decisions and transportation policies have long been evident. Managing inventory in complex supply chains is typically difficult and may have a significant impact on the customer service level and supply chain system- wide cost
Introduction to Inventory Management The importance of inventory positioning and the need for the coordination of inventory decisions and transportation policies have long been evident. Managing inventory in complex supply chains is typically difficult and may have a significant impact on the customer service level and supply chain systemwide cost
What Is Inventory? Stock of items kept to meet future demand
What Is Inventory? Stock of items kept to meet future demand
What Is Inventory? The goal of effective inventory management Have the correct inventory at the right place at the right time Minimize system costs while satisfying customer service requirements Tasks of inventory management How many units to order When to order
What Is Inventory? The goal of effective inventory management Have the correct inventory at the right place at the right time Minimize system costs while satisfying customer service requirements Tasks of inventory management How many units to order When to order
Customers, Field demand Sources: Regional Warehouses: centers plants Warehouses: stocking sinks vendors stocking points ports points Supply Inventory warehousing costs Production/ purchase Transportation Transportation costs costs costs Inventory Where do we hold inventory? warehousing costs
Supply Sources: plants vendors ports Regional Warehouses: stocking points Field Warehouses: stocking points Customers, demand centers sinks Production/ purchase costs Inventory & warehousing costs Transportation costs Inventory & warehousing costs Transportation costs Where do we hold inventory?
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers ■Retailers Types of Inventory WIP(work-in-process):partially completed products ■Raw materials ·Finished goods Why do we hold inventory?
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers Retailers Types of Inventory WIP(work-in-process): partially completed products Raw materials Finished goods Why do we hold inventory?
Positive and Negative Effects of Inventory Positive ·Buffer effect(缓冲作用) Economics of scale in transportation and purchocin Continuous production Customer service level Inventory
Positive and Negative Effects of Inventory Positive Buffer effect （缓冲作用） Economics of scale in transportation and purchasing Continuous production Customer service level
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers ■Retailers Types of Inventory WIP(work-in-process):partially completed products ■Raw materials ■Finished goods Why do we hold inventory? ■Economies of scale Uncertainty in supply and demand Lead Time,Capacity limitations
Inventory Where do we hold inventory? Suppliers and manufacturers Warehouses and distribution centers Retailers Types of Inventory WIP(work-in-process): partially completed products Raw materials Finished goods Why do we hold inventory? Economies of scale Uncertainty in supply and demand Lead Time, Capacity limitations
Think-Pair-Share Take 2 min.to consider examples (p24):Dell,Liz Claiborne,IBM and Cisco,think about the question below,then discuss with your neighbors What are the causes of the problems that these companies are facing?
What are the causes of the problems that these companies are facing? Think – Pair – Share Take 2 min. to consider examples (p24): Dell, Liz Claiborne, IBM and Cisco, think about the question below, then discuss with your neighbors