Summary of operations research knowledge points (4)

A full set of operations research knowledge points

Chapter 4 Inventory Management

1. Inventory types of industrial enterprises

The inventory of industrial enterprises includes:
(1) Raw materials that have not been processed by the enterprise.
(2) Work in progress that has been processed by the enterprise but not yet completed
(3) Finished products and spare parts that have been processed by the enterprise and are to be sold

2. The role and significance of inventory management

1. Role: The most basic aspect of the role of inventory is to ensure that the production of industrial enterprises can be carried out in a normal, continuous and balanced manner. Specifically:
   (1) Adapt to the seasonality of the supply of raw materials, such as agricultural products.
   (2) Adapt to the seasonality of product sales.
   (3) Adapt to the rationality and economy of transmission
   (4) Adapt to the reasonable arrangement of production, if any equipment has a high productivity
   (5) Adapt to the size of the wholesale volume
2. Significance
   (1) Ensure that the company achieves balanced production according to a scientific plan, and does not stop production due to lack of raw materials or other materials.
   (2) Minimize the cost of inventory management

Three, the content of inventory management

1. Determine economic purchase volume or economic production batch
2. Determine a suitable order advance
3. Determine an appropriate amount of safety stock
4. Calculate the minimum inventory cost
5. Propose effective management and control methods

Fourth, the inventory management method of inventory counters

Taking inventory sets as the inventory management unit, a certain inventory set can include various related single items of inventory.

Five, the ABC analysis method of inventory management

The ABC analysis method is to divide various inventory sets or inventory units into three categories
A , B, and C according to their annual needs. A: Inventory sets account for only 10% of the total, and the annual demand value accounts for 70% of the total. %
The reasons for strengthening management of this type are:
(1) The number of sets is not large, and management is relatively easy.
(2) The investment in the management of Class A inventory sets can achieve greater economic effects.
(3) Other inventory sets, such as fire-proof equipment, explosive and explosive items, and highly toxic items, no matter how much they are worth, because they have Special effects should also be regarded as category A and category
B: inventory sets accounted for 30% of the total, and annual demand value accounted for 20%.
Category C: inventory sets accounted for 60% of the total, and annual demand value accounted for 10%.
For B, C category, can be more rough in management, such as quarterly, half-yearly orders. The management of these stocks only focuses on not being out of stock, not affecting production, not rusting and deteriorating, and not causing economic losses

Six, inventory cost model structure

1. The warehouses of enterprises can generally be divided into two types: raw material warehouses and semi-finished products and finished products warehouses.
2. The storage fee is directly related to the size of the inventory, and is proportional to the average inventory of the inventory
3. The structure of the raw material inventory cost model: inventory cost = ordering cost + storage cost (TC = P + C)
4. Semi-finished and finished product inventory cost model structure: inventory cost = tooling adjustment fee + storage fee (TC = S+C)

Seven, inventory costs

1. Ordering cost = annual required quantity/ordering quantity * one ordering fee
   that is p = D/N * P0
   transportation is usually added to the unit price of the item into the factory, not included in the ordering cost
2. Tooling adjustment fee
   Tooling adjustment fee = annual planned output/production batch * One-time tooling adjustment fee
   , namely S = R / N * P. In the
   case of mass production, the adjustment and inspection of process equipment, tool cards and equipment before each batch is put into production cost.
3. Management fee:
   storage fee = average inventory * unit material storage fee
   , ie C= 0.5*N *C0
   because it is difficult to calculate unit material storage fee, it is usually calculated by the storage fee rate:

Custody fee rate (Ci) = the total amount of custody costs pointed out by the entire company throughout the year (C) / the average total inventory of various inventories of the entire company throughout the year (M).
Therefore, custody costs can also be expressed as: custody fee = average inventory inventory The storage fee rate for the unit price of materials , namely C=0.5*N * R * Ci

8. The concept of average inventory

Average inventory is divided into two types: average inventory and average inventory.
Average inventory = average inventory * unit price per unit or set (M =0.5*N *R)

9. Calculation method of economic order quantity (EOQ)

Economic Order Quantity (EOQ) is the best order quantity determined for a certain set or a certain inventory unit to minimize the total inventory cost. The
main method:

1. Table calculation method
   (1) Select a certain number of possible purchase quantity plans each time
   (2) Determine the total cost of each plan
   (3) Select the order quantity with the smallest total cost
2. Graphical method
   The total cost of inventory storage and ordering is decreasing at first, and then reaches the lowest point where the storage cost is equal to the ordering cost.
3. Mathematical method
   (1) Algebraic method
   ①set variable ②derive formula
   (2) derivative method
   Inventory cost = ordering cost + storage cost = annual requirement / order quantity * one order cost + average inventory quantity * unit material storage cost
   can be deduced , When ordering fee = storage fee , the total inventory cost reaches the minimum, and the economic order quantity can be calculated by bringing in the known data.
   Among them, the average inventory = half of the order lot, the average inventory balance = the average inventory * unit price

10. Confirmation of order time

The premise of determining the inventory model is that the usage amount and the premise time are constant.
In order to prevent production from being interrupted due to lack of stock, and to prevent too many reserves in the warehouse, the following factors should be considered comprehensively for the determination of the ordering time

1. Two meanings of the reorder point
   (1) Time meaning: When to reorder a certain item of inventory
   (2) Inventory level meaning: When the inventory level of a certain item reaches the inventory level, the order should be placed.
2. Lead time: Also known as order lead time
   (1) The warehouse purchasing department sends out a notice of the inventory level to the reorder level.
   (2) Carrying out or entrusting various purchases from the sending of order information to the goods entering the warehouse.
3. Demand in lead time: also known as the demand in order lead time, that is, the inventory level of a certain inventory when the order should be reordered.
4. Out of stock: There is no inventory in the warehouse that can meet the needs of production or sales
5. Safety stock: also known as insurance stock, it is the extra stock kept in order to prevent possible shortages.
   For companies, the safety stock should be replaced regularly to avoid corrosion and deterioration. The total amount should be calculated when calculating the amount.
6. Work-in-progress quantitative time issues: The production lead time includes all stages from the semi-finished product warehouse to the production workshop according to the order point to the production workshop, through the workshop production preparation, processing, inspection, and storage.

11. Advantages and disadvantages of mass purchase

Advantages:
(1) It can be purchased at a lower price
(2) It can reduce the number of orders and reduce the cost of ordering
(3) Purchase in large quantities, and can also be transported in large quantities to obtain preferential freight rates.
(4) The quantity of the purchase is large, and the possibility of shortage is less.
Disadvantages:
(1) High storage fee
(2) Need to take up more funds
(3) Inventory goods will become obsolete and obsolete
(4) Replacement of inventory goods
Low rate (5) Low flexibility to adapt to fashion, especially for clothing, cosmetics and other commodities.
(6) Increase in inventory, increase loss, and increase the possibility of goods depreciation

12. Quantity discounts provided by correct and affordable suppliers

The economic order quantity refers to the order quantity with the lowest inventory cost, but the supplier often proposes that if the order quantity is increased once, then the product price will be discounted. At this time, the inventory cost will increase. We need to compare to make which plan more suitable.