October 18, 2012
CL ASS 13 – SUPPLY CHAIN OPERATIONS
Guest Speaker – Mahesh Nagarajan
• Research - Mathematical modeling and optimization; health care
• Manufacturer –> Distributor –> warehouse –> retail
• Different company has different strategy, no one right formula
• Lululemon – “Class A problem” – supply can’t keep up with demand
o Good or bad problem?
o Cost money for inventory, how much to keep in inventory
Days of inventory – time from when production begins to when the inventory is sold
• Inventory turnover ratio = (COGS)/ (Inventory)
o COGS = Cost of Goods Sold = Cost of Revenue
• Number of times in a year that you sell all your inventory – replenishment
o Eg. 2 = sell all your inventory twice a year
o Cannot compare to different industry (e.g. food vs. Technology)
• 365/ratio = days it takes
• Box of cereal – how many days does it take from “factory to final sale”?
o No expiry dates
o About 104 days
o Send out in large bulk, saves cost
o Economists have different concerns • “buying direct” habits – from where it is produced (e.g. farmers)
What is Operations Management?
• What does an operations manager in a typical Fortune 500 firm do?
o Coordinating suppliers, managing supplies
o Product gets sent to where they want to
o E.g. Air Canada – scheduling crew
• Introduction of a new product – strategic position