Welcome to Class

1
Welcome to Class 6

• Housekeeping
• Current Events
• Guest Speaker
• Inventory
• Midterm

2
Inventory Management

• How much of what and when do you order?
• Goal Decrease inventory while increasing
  customer satisfaction!!
• Dependent vs. Independent
• Push vs. Pull
• System vs. Single

3
Materials Resource Planning

• Set of logically related procedures, decision
  rules and records designed to translate a master
  production schedule into time-phased net
  inventory requirements and planned coverage
• Demand for components depends on
• demand for the final product

4
Customer Orders
Demand Forecast
Master Production Schedule
Inventory Status file
Bill of Materials
MRP Program
Outputs And Reports
5
Goals of MRP

• Ensure the availability of materials, components
  and products for planned production and for
  customer delivery
• Maintain the lowest possible inventory levels
• Plan manufacturing activities, delivery schedules
  and purchase activities
• Aid in lead time management and the
• elimination of waste

6
MRP

• Advantages
• Reasonable safety stock and decrease inventory
• Identify process problems and Supply Chain
  disruptions
• Based on actual demand and forecast
• Coordinate order processing

• Disadvantages
• Once in motion, change may be difficult
• Ordering and transportation cost may increase
• Can become very complex
• Not sensitive to short term demand change

7
Manufacturing resource planning, MRPII

• Adds to MRP the functions of marketing, finance,
  operations/logistics, capacity
• Look at What if?

8
Just In TimeAn approach to manufacturing and
inventory management

• Its a culture of quality,vendor partnerships and
  employee teams
• 4 Elements
• Zero inventory
• Short lead times
• Frequent Replenishment
• Zero Defects

9
Distribution Resource Planning, DRP

• Requirements
• Forecast of demand
• Current inventory level
• Target safety stock
• Recommended replenishment quantity
• Lead time for replenishment
• Forecast demand and explode the information back

10
The Logistician

• Logistics is vital to the success of any
  campaign
• As business becomes more global, the need for
  individuals who possess the ability to anticipate
  problems and better position the organization for
  success will increase
• Integrate the parts, make it one!!

11
Logistics Activities

• Transportation
• Storage
• Packaging
• Materials handling
• Order fulfillment
• Forecasting

• Production planning
• Purchasing
• Customer service
• Site location
• Other activities

12
A Complex Logistics Channel
13
Domestic F.O.B. Terms of Sale

• F.O.B. origin - buyer pays freight, owns goods
  once loaded, controls movement of the goods
• Responsibility, title and risk pass at origin
• F.O.B. destination - seller pays freight, owns
  goods until delivered, controls movement of the
  goods
• Responsibility, title and risk pass upon delivery
• How much of the responsibility do you want and
  how does it fit with your strategy?

14
Types of inventory

• Normal certain times
• Acquisition, transportation, production
• Safety Stock uncertain times
• Demand side, supply side
• Squirrel stock
• In-transit
• Long transit time vs. short transit time

15
Types of inventory

• Speculative
• Trade-off calculation
• Seasonal
• Transportation, RM, FG
• Dead

16
Figure 9-2 Carrier Selection Determinants and
User Implications
17
Transportation Services

• Line-Haul Services
• Reconsignment
• Diversion
• pooling
• Stopping in Transit
• Transit Privilege

• Terminal Services
• Consolidation
• Dispersion
• Shipment services
• Vehicle services
• Interchange
• Loading Unloading
• Weighing
• Tracing/Expediting

18
Domestic Freight Bills

• Carriers invoice for charges for a given
  shipment.
• Shipment, origin destination, consignee,
  weight, items and charges
• Credit terms are stipulated by the carrier
• Bills may also be either
• Prepaid-Carriers presents bill day of shipment
• Collect- Carrier presents bill on day of
  delivery
• Audit your freight bills!!!

19
Domestic Claims

• A document filed with the carrier to recover
  monetary losses due to losses, damage, delay or
  overcharges by the carrier.
• Typically, claims are filed within 9 months,
  claimant in notified by receipt within 30 days,
  and settlement or refusal within 120 days.
• Claims terms can be stipulated in the contract of
  carriage agreement and may be atypical.