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STORES FUNCTIONS 1.RECEIPT 2.STORAGE 3.RETRIEVAL 4.ISSUE 5.RECORD KEEPING 6.HOUSE KEEPING 7.SURPLUS MANAGEMENT 8.VERIFICATION 9.COORDINATION. TYPES OF STORES. 1.CENTRALISED 2.DECENTRALISED. IDENTIFICATION OF ITEMS (CODIFICATION). 1.ALPHABETICAL 2.ALPHA-NUMERICAL 3.NUMERICAL - PowerPoint PPT Presentation
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STORES FUNCTIONSSTORES FUNCTIONS
1.RECEIPT1.RECEIPT
2.STORAGE2.STORAGE
3.RETRIEVAL3.RETRIEVAL
4.ISSUE4.ISSUE
5.RECORD KEEPING5.RECORD KEEPING
6.HOUSE KEEPING6.HOUSE KEEPING
7.SURPLUS MANAGEMENT7.SURPLUS MANAGEMENT
8.VERIFICATION8.VERIFICATION
9.COORDINATION9.COORDINATION
IDENTIFICATION OF ITEMSIDENTIFICATION OF ITEMS(CODIFICATION)(CODIFICATION)
1.ALPHABETICAL1.ALPHABETICAL
2.ALPHA-NUMERICAL2.ALPHA-NUMERICAL
3.NUMERICAL3.NUMERICAL
4.COLOUR CODES4.COLOUR CODES
5.BAR CODES5.BAR CODES
STORAGE SYSTEMSSTORAGE SYSTEMS
1.CLOSED STORE SYSTEM1.CLOSED STORE SYSTEM
2.OPEN STORE SYSTEM2.OPEN STORE SYSTEM
STORES ACCOUNTINGSTORES ACCOUNTING
FIFOFIFO
LIFOLIFO
AVERAGE COSTAVERAGE COST
MARKET VALUEMARKET VALUE
STANDARD COST SYSTEMSTANDARD COST SYSTEM
STOCK VERIFICATIONSTOCK VERIFICATION
ANNUAL VERIFICATIONANNUAL VERIFICATION
CONTINOUS STOCK VERIFICATIONCONTINOUS STOCK VERIFICATION
LOW POINT VERIFICATIONLOW POINT VERIFICATION
STORES EQUIPMENTSSTORES EQUIPMENTS
BINSBINSTRAYSTRAYSDRUMSDRUMSBARRELSBARRELSSHELVESSHELVESRACKSRACKSPALLETSPALLETS
MATERIAL HANDLING MATERIAL HANDLING EQUIPMENTSEQUIPMENTS
TROLLEYSTROLLEYSFORK-LIFT TRUCKSFORK-LIFT TRUCKSHOISTSHOISTSMONORAILMONORAILBELT CONVEYORBELT CONVEYORROLLER CONVEYORROLLER CONVEYORCRANESCRANES
STANDARDISATIONSTANDARDISATION
STANDARDISATION HELPS INSTANDARDISATION HELPS IN
1.REDUCING INVENTORY1.REDUCING INVENTORY
2.INTERCHANGEABILITY2.INTERCHANGEABILITY
Economic-Order-Quantity Economic-Order-Quantity Decision Model ExampleDecision Model Example
20 - 15
Rel
evan
t Tot
al C
osts
(D
olla
rs)
2,000
4,000
6,000
8,000
10,000
5,434
600 1,200 1,800 2,400988EOQ
Annual relevant carrying costs
Annual relevant total costs
Annual relevant ordering costs
Order Quantity (Units)
Reorder PointReorder Point988
494
Weeks 1 2 3 4 5 6 7 8
Reorder Point
Reorder Point
This exhibit assumes that demand and purchase-order lead time are certain:
Demand = 247 tape packages/week Purchase-order lead time = 2 weeks20 - 17
Lead Time2 weeks
Lead Time2 weeks
When to Reorder with EOQ When to Reorder with EOQ OrderingOrdering
Reorder Point Reorder Point - When the quantity on - When the quantity on hand of an item drops to this amount, hand of an item drops to this amount, the item is reorderedthe item is reordered
Safety Stock Safety Stock - - Stock that is held in Stock that is held in excess of expected demand due to excess of expected demand due to variable demand rate and/or lead time.variable demand rate and/or lead time.
Service Level Service Level - - Probability that Probability that demand will not exceed supply during demand will not exceed supply during lead time.lead time.
Determinants of the Reorder Determinants of the Reorder PointPoint
The rate of demandThe rate of demandThe lead timeThe lead timeDemand and/or lead time variabilityDemand and/or lead time variabilityStockout risk (safety stock)Stockout risk (safety stock)
Safety StockSafety Stock
LT Time
Expected demandduring lead time
Maximum probable demandduring lead time
ROP
Qu
an
tity
Safety stock
Figure 11.12
Safety stock reduces risk ofstockout during lead time
Reorder PointReorder Point
ROP
Risk ofa stockout
Service level
Probability ofno stockout
Expecteddemand Safety
stock0 z
Quantity
z-scale
Figure 11.13
The ROP based on a normalDistribution of lead time demand
Safety Stock ExampleSafety Stock Example
Safety stock is inventory held at all timesregardless of the quantity of inventory
ordered using the EOQ model.
Video’s expected demand is 247 packages per week.
Management feels that a maximum demand of350 packages per week may occur.
Safety Stock ExampleSafety Stock Example
How much safety stock should be carried?
350 Maximum demand – 247 Expected demand= 103 Excess demand per week
103 packages × 2 weeks lead time= 206 packages of safety stock.
Just-In-Time PurchasingJust-In-Time Purchasing
Just-in-time (JIT) purchasing is the purchaseof goods or materials such that a delivery
immediately precedes demand or use.
Companies moving toward JIT purchasingargue that the cost of carrying inventories(parameter C in the EOQ model) has beendramatically underestimated in the past.
JIT Purchasing and EOQJIT Purchasing and EOQModel ParametersModel Parameters
The cost of placing a purchase order(parameter P in the EOQ model) is
also being re-evaluated.
Three factors are causing sizable reductionin the cost of placing a purchase order (P).
1. Companies increasingly are establishinglong-run purchasing arrangements.
JIT Purchasing and EOQJIT Purchasing and EOQModel ParametersModel Parameters
2. Companies are using electronic links,such as the Internet, to place purchase orders.
3. Companies are increasing the use ofpurchase order cards (similar to consumercredit cards like Visa and Master Card).
Just-In-Time Production Just-In-Time Production SystemsSystems
Just-in-time (JIT) production systems take a“demand pull” approach in which goods are
only manufactured to satisfy customer orders.