Inventory control and management strategies
Essence and Parameters of Inventory Management Strategies
The development of a stock management strategy is carried out with the aim of continuously supplying the customer with material resources, raw materials or finished products through the implementation of a system of measures to maintain the stock size within specified limits.
Elements of the inventory management strategy are:
• a system for monitoring and accounting for the level of stock in warehouses, which includes solutions to questions about the frequency (frequency) of monitoring and determining the parameters of accounting and control;
• The system for organizing the order for replenishment of the stock, within which decisions are determined to determine the conditions under which the order to replenish the stock is made and the method of calculating the size of the order for replenishment of the stock;
• models for calculating the parameters of the current, insurance, preparatory stocks.
You can adjust the stock level in three basic ways:
1) change the order quantity (delivery schedule size);
2) change the period between orders (delivery interval);
3) simultaneously change the order quantity and the interval between deliveries. The parameters necessary for describing the strategies of inventory management are presented in Table. 6.15.
Table 6.15. The main parameters of inventory management strategies
Types and algorithm for the formation of inventory management strategies
How to ...
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The variety of inventory management strategies is explained by the possibility of combining various methods of inventory management in the process of solving practical problems. Inventory management strategies can be divided into three groups:
1) periodic strategies (products are ordered at regular intervals);
2) strategies with the order point (strategies with the same order size);
3) combined strategies. The classification of strategies is shown in Fig. 6.20.
Fig. 6.20. Classification of inventory management strategies
Periodic strategies imply that the order for replenishment is made at certain, predetermined times, the period between orders - a constant (Tcl = const). Control over the level of stocks in the warehouse is carried out only at the time of placing an order (t3).
In the operational management strategy, the order quantity (Qt) is variable and is calculated so that the stock level after delivery reaches the desired level (5 | 11ах). In the classic interpretation of the uniform supply strategy, the order quantity is constant (Qopl = const).
Strategies with an order point suggest placing an order for replenishment after reaching a certain stock level in the warehouse - the so-called order point (ROP) or a preset minimum acceptable level (5min or 5). Strategies with an order point assume a continuous or periodic monitoring of the level of the stock (A - * 0 or A = const). The volume of orders can be either constant or variable.
In a strategy with a fixed order size, the order for replenishment is done after reaching a certain threshold level of the current stock, or order point. The order quantity is a constant (G ^ Qo/.r ™ nst).
A two-level strategy, or a minimax strategy, provides that a stock replenishment request is placed every time a certain minimum stock level is reached (5min or s), the order quantity is variable and is calculated in such a way that the level of the stock after delivery has reached the maximum desired level (5ta).
Combined strategies assume that the order placement for replenishment takes place with a different combination of conditions ROP ( point of order) and (frequency of orders) & quot ;. Control over the state of stocks in warehouses can be either periodic (A = const) or continuous (A -> 0). The volume of the order is usually variable and is done on the basis that after the delivery a certain maximum desired level of stock is reached (51 pax).
In Fig. 6.21 summarizes the elements of the process of forming strategies and the main factors that influence their choice.
Existing inventory management strategies are mainly designed for work in systems where demand is continuous or moderately discrete. However, in practice, there are often situations of rare and impulse demand.Rare demand is characterized by a small expenditure of material resources, while the moments of the emergence of the need are unevenly distributed in time and separated from each other by long intervals of "zero" consumption.
With impulse demand , the need for material resources also has a strongly pronounced discrete character: relatively large volumes ("spikes") of consumption are replaced by long periods of "zero" demand. In situations of rare and impulse demand, it is impossible to make an accurate forecast of the need or to determine the insurance stock, therefore the considered inventory control systems (simple and combined) are not suitable in these cases.
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In the situation of impulse and rare demand, it is first of all necessary to determine the causes that cause such a character of consumption of mate
Fig. 6.21. Generating inventory management strategies
of real resources, and only after that to select individual solutions, representing a synthesis of methods of the theory of inventory management, management and marketing.
The movement of spare parts stock for buses was analyzed at the trucking enterprise. A number of positions have a stable demand, others show an impulsive nature of the requirements. For example, this is typical for air filters. Pa Fig. Figure 6.22 shows the filter requirement graph, which confirms the presence of the pulse demand.
Fig. 6.22. Pulse consumption of material resources (air filters for buses)
Analysis of the requirements of the repair area of the transport enterprise shows that the need for air filters is determined by the periodicity of maintenance of cars (the TO-1 is conducted through 20 thousand km of run, the TO-2 - through 60 thousand km of run), which explains brightly expressed discrete nature of demand. Since the need for air filters is strictly regulated and is associated with the periodicity of maintenance, the constant stock of this material resource in the warehouse of a trucking enterprise does not need to be kept. It is possible to break buses into service groups and for each group to make a replacement at a certain time, having pre-ordered the necessary number of filters.
To select a stock management strategy, it is recommended that you model each of them and then perform a comparison based on the following indicators: total deficit, deficit losses, average stock level, storage costs, costs associated with the organization of the system for this strategy (costs on delivery, monitoring of stock level), profit.
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