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  • Safety Inventory Exercises

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    Parnabho Kundu
    136 views12 pages
    This document contains supply chain data and metrics for multiple products across different transportation modes and aggregation levels. Key information includes: - Mean weekly demand, standard deviation, order quantity, lead time, reorder point, safety stock, and service level for individual retail stores and aggregated demand across stores. - Inventory, holding costs, and benefits of aggregation for two clothing products shipped to multiple retail stores. - Sea transportation data showing average inventory, costs, and optimization of using transit inventory versus owned inventory. - Air transportation data for a single product with shorter lead time and replenishment cycle. The document compares supply chain performance under different demand, replenishment, and transportation scenarios.

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    Supply Chain Management

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    This document contains supply chain data and metrics for multiple products across different transportation modes and aggregation levels. Key information includes: - Mean weekly demand, standard deviation, order quantity, lead time, reorder point, safety stock, and service level for individual retail stores and aggregated demand across stores. - Inventory, holding costs, and benefits of aggregation for two clothing products shipped to multiple retail stores. - Sea transportation data showing average inventory, costs, and optimization of using transit inventory versus owned inventory. - Air transportation data for a single product with shorter lead time and replenishment cycle. The document compares supply chain performance under different demand, replenishment, and transportation scenarios.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    136 views12 pages

    Safety Inventory Exercises

    Uploaded by

    Parnabho Kundu
    This document contains supply chain data and metrics for multiple products across different transportation modes and aggregation levels. Key information includes: - Mean weekly demand, standard deviation, order quantity, lead time, reorder point, safety stock, and service level for individual retail stores and aggregated demand across stores. - Inventory, holding costs, and benefits of aggregation for two clothing products shipped to multiple retail stores. - Sea transportation data showing average inventory, costs, and optimization of using transit inventory versus owned inventory. - Air transportation data for a single product with shorter lead time and replenishment cycle. The document compares supply chain performance under different demand, replenishment, and transportation scenarios.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 12

    Mean Weekly Demand, D 2,500

    Standard Deviation of Weekly Demand 500


    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2
    ROP 6,000
    Lead time Demand, DL 5000
    SD of Lead Time Demand 707.1067812
    Safety Stock 1000
    Cycle Service Level 92.14%

    No of orders 13
    No of replenishment cycles out of stock 1.022444846
    Mean Weekly Demand, D 2,500
    Standard Deviation of Weekly Demand 500
    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2
    ROP 6,000
    Lead time Demand, DL 5000
    SD of Lead Time Demand 707.1067812
    Safety Stock 1000
    Expected Shortage Quantity, ESQ 25.13
    Fill Rate 99.75%
    Mean Weekly Demand, D 2,500
    Standard Deviation of Weekly Demand 500
    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2
    Lead time Demand, DL 5000
    SD of Lead Time Demand 707.1067812
    Cycle Service Level 90.00%

    Safety Stock (=ROP-DL) 906.1938024

    Reorder Point 5906.193802


    (=DL+Safety Stock)
    Mean Weekly Demand, D 2,500
    Standard Deviation of Weekly Demand 500
    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2

    Lead time Demand, DL 5000


    SD of Lead Time Demand 707.106781
    Desired Fill Rate 97.50%
    Expected Shortage Quantity, ESQ 250.00
    RHS of ESQ 250.00
    Safety Stock (Changeaging Cell) 66.6975571
    Mean Weekly Demand, D 2,500
    Standard Deviation of Weekly Demand 500
    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2

    Lead time Demand, DL 5000


    SD of Lead Time Demand 707.1067812
    Desired Fill Rate 97.50% 98% 98.50% 99% 99.50%
    Expected Shortage Quantity, ESQ 250.00 200.00 150.00 100.00 50.00
    RHS of ESQ 250.00 200.00 150.00 100.00 50.00
    Safety Stock (Changeaging Cell) 66.70 182.97 321.53 499.25 767.05
    Mean Weekly Demand, D 2,500
    Standard Deviation of Weekly Demand 500
    Order Quantity, Q 10,000
    Replenishment Lead Time, L 2 2.1 2.2 2.3 2.4

    Lead time Demand, DL 5000


    SD of Lead Time Demand 707.1067812 724.5688 741.6198 758.2875 774.5967
    Desired Fill Rate 97.50%
    Expected Shortage Quantity, ESQ 250.00 250.00 250.00 250.00 250.00
    RHS of ESQ 250.00 250.00 250.00 250.00 250.00
    Safety Stock (Changeaging Cell) 66.70 81.80 96.76 111.56 126.23

    Effect of Changing Sigma 500 525 550 575 600


    SD of Lead Time Demand 707.1067812 742.4621 777.8175 813.1728 848.5281
    RHS of ESQ 250.00 250.00 250.00 250.00 250.00
    Safety Stock 66.70 97.50 129.14 161.59 194.79

    Percentage Change 0% 5% 10% 15% 20%


    250.00

    200.00 194.79

    161.59
    150.00
    129.14 126.23
    111.56
    100.00 97.50 96.76
    81.80
    66.70
    50.00

    0.00
    0% 5% 10% 15% 20%
    Mean Weekly Demand, D 250
    Standard Deviation of Weekly Demand 150
    Order Quantity, Q 1,000
    Replenishment Lead Time, L 2
    Reorder Level, R 600
    Lead time Demand, DL 500
    Safety Stock, ss 100
    SD of Lead Time Demand 212.132
    Cycle Service Level 68.13%

    Safety Stock (=ROP-DL) 100

    Reorder Point 600


    (=DL+Safety Stock)
    Expected Shortage Quantity, ESC 43.86126
    Fill Rate 95.61%
    Product Large Khaki Pants
    Mean Weekly Demand, D 800
    Standard Deviation of Weekly Demand 100
    Replenishment Lead Time, L 4
    Lead time Demand, DL 3200
    SD of Lead Time Demand 200
    Cycle Service Level 95.00%

    Safety Stock (=ROP-DL) 328.9707253903

    Reorder Point 3528.9707253903

    Price 30
    Holding cost 25%

    Total Safety Stock at 900 retail stores 296073.652851265


    Total Inventory at 900 retail stores 3176073.65285126

    Aggregation
    Aggregated Weekly Demand 720000
    SD of aggregated weekly demand 3000
    Replenishment Lead Time, L 4
    Lead time Demand, DL 2880000
    SD of Lead Time Demand 6000
    Cycle Service Level 95.00%

    Safety Stock (=ROP-DL) 9869.1217617088

    Reorder Point 2889869.12176171

    Benefit of Aggregation (Inventory Units) 286204.531089556


    Benefit of Aggregation ($) $2,146,533.98
    Product Cashmere Sweaters
    Mean Weekly Demand, D 50
    Standard Deviation of Weekly Demand 50
    Replenishment Lead Time, L 4
    Lead time Demand, DL 200
    SD of Lead Time Demand 100
    Cycle Service Level 95.00%

    Safety Stock (=ROP-DL) 164.4853626951

    Reorder Point 364.4853626951

    Price 100
    Holding cost 25%

    Total Safety Stock at 900 retail stores 148036.826425632


    Total Inventory at 900 retail stores 328036.826425632

    Aggregation
    Aggregated Weekly Demand 45000
    SD of aggregated weekly demand 1500
    Replenishment Lead Time, L 4
    Lead time Demand, DL 180000
    SD of Lead Time Demand 3000
    Cycle Service Level 95.00%

    Safety Stock (=ROP-DL) 4934.5608808544

    Reorder Point 184934.560880854

    Benefit of Aggregation (Inventory Units) 143102.265544778


    Benefit of Aggregation ($) $3,577,556.64
    Transportation Mode Sea Transport
    Mean Daily Demand, D 5,000
    Standard Deviation of Daily Demand 4,000
    Effective Replenishment Lead Time, L 16
    Lead time Demand, DL 80000
    SD of Lead Time Demand 16000
    Cycle Service Level 99.00%
    Order Quantity 100,000
    Safety Stock (=ROP-DL) 37221.5659846535

    Reorder Point 117221.565984653

    Days of Safety Inventory 7.4443131969


    Average Cycle Inventory 50000
    Days of Cycle Inventory 10
    Price 100
    Holding cost 20%
    Transportation Costs $0.50
    Total Average Inventory 87,221.57
    Total Inventory Costs $1,744,431.32
    Transportation Costs $912,500.00
    Annual Costs $2,656,931.32

    If transit inventory is owned


    No of lots always in transit 1
    Cost of Transit Inventory $2,000,000.00
    Total Costs $4,656,931.32
    Transportation Mode Air Transport
    Mean Daily Demand, D 5,000
    Standard Deviation of Daily Demand 4,000
    Effective Replenishment Lead Time, L 1
    Lead time Demand, DL 5000
    SD of Lead Time Demand 4000
    Cycle Service Level 99.00%
    Order Quantity 5,000
    Safety Stock (=ROP-DL) 9305.3914961634

    Reorder Point 14305.3914961634

    Days of Safety Inventory 1.8610782992


    Average Cycle Inventory 2500
    Days of Cycle Inventory 0.5
    Price 100
    Holding cost 20%
    Transportation Costs $1.50
    Total Average Inventory 11,805.39
    Total Inventory Costs $236,107.83
    Transportation Costs $2,737,500.00
    Annual Costs $2,973,607.83

    If transit inventory is owned


    No of lots always in transit 0
    Cost of Transit Inventory 0
    Total Costs $2,973,607.83

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