33:799:310 Lecture 4: 4 Cycle Stock
Document Summary
Determine the lowest safety stock levels that meet your business requirements. Calculate cost-effective order quantities: in practice, we often hear. We always try to order a 30-day supply . We keep safety stock as 50% of lead-time demand . We keep safety stock as one week demand : where are these numbers coming from, two basic inventory control questions: Demand fulfillment procedure: determine an order cycle, forecast demand in the next order cycle, make an order. Annual order cost = (number of orders placed per year) x (setup or order cost per order) Order (setup) and holding costs: order cost (s) is the sum of the fixed costs that are incurred each time an item is ordered or produced. Inbound inspection/putaway costs and outbound pick-up costs. Insurance: high value of h prevents ordering too much each time. Inventory usage over time l e v e l y r o t n e v n.
