Operations Research Chapter 4 Inventory Management

Chapter 4 Inventory Management
1. The role of
    inventory management One of the most basic aspects of inventory management is to ensure that the production of industrial enterprises can be carried out in a normal, continuous and balanced manner. It can be divided into the following categories:
  1. Adapt to the seasonality of raw materials
  2. Adapt to the seasonality of product sales
  3. Adapt to the rationality and economy of transportation
  4. Adapt to the reasonable arrangement of production
  5. Adapt to the size of wholesale volume
2. Inventory management Significance
 1. Ensure that the enterprise realizes balanced production according to the scientific plan, and does not stop production due to lack of raw materials or other materials.
 2. Minimize the total cost of inventory.
The inventory management method of inventory management and ABC classification management
1. The content of the
inventory management method The inventory management unit is used as the inventory management unit. A certain inventory management system can include various related single items of inventory. He simplifies the content of the work and can guarantee the complete set of supply.
2. ABC classification management
According to the value and quantity of various inventories, they are divided into three categories ABC.
  Class A: 10% in quantity, 70% in value, special items such as fire-proof equipment, inflammable and explosive items, highly toxic and radioactive items, etc., to strengthen the management of such items.
  Type B: Quantity 30%, value 20%
  Type C: Quantity 60%, value 10%. The
   management of Type B and C can be roughly rough, as long as there is no shortage of goods and normal production is not affected.
Inventory cost analysis and the concept of average inventory
Two types of inventory models
1. Raw material inventory cost model inventory cost = ordering cost + storage cost
2. Semi-finished product and finished product inventory cost model inventory cost = tooling adjustment cost + storage cost
Three types of inventory costs
1. Ordering costs: When arranging a certain order, each time you have to bear the cost, report the salary of the purchaser, office expenses, travel expenses, etc.
    Ordering fee=annual demand/order quantity*one-time order quantity.
2. Tooling adjustment fee: the cost of adjusting the process and equipment when mass production is carried out.
     Tooling adjustment fee = annual planned output/production batch * one-time tooling adjustment fee
3. Storage fee: the cost of keeping inventory materials. The storage fee rate is often used, which is expressed as a percentage of inventory funds. According to statistics, storage fees account for more than 20% of inventory on average.
   Storage fee = average inventory quantity X unit price of inventory materials X storage fee rate
Economic order quantity calculation method
   Economic order quantity (EOQ): the best for a certain set or a certain inventory unit that minimizes the total inventory cost The
main method of ordering batch
1. Table calculation method.
2. Graphical method.
3. Mathematical method
Economic order quantity: the best order quantity to make the total order cost of storage for the whole year reach the minimum