UT Knoxville BUAD 331 - Chapter 5 (21 pages)

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Chapter 5



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Chapter 5

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Pages:
21
School:
University of Tennessee
Course:
Buad 331 - CBM I: Supply Chain Mgt
CBM I: Supply Chain Mgt Documents

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BA331 Supply Chain Management Chapter 5 Shay Scott Ph D Department of Marketing and SCM Managing Director Global Supply Chain Institute University of Tennessee sdscott utk edu Order Cycle Elapsed time from recognition of need until product is available for use or resale Buy er Order Receipt Processi ng Sell er Order fulfillment Order transmittal Order shipment Order preparation Invoice and billing Recognize need Order complete Service and support Fulfillment Decisions Inventory BOH Forecast for Next Period Service Level Policy Quantities Lead Times Decision Rules 1 What should we produce or purchase 2 How much should we produce or purchase 3 Where should we position the product Determining transportation modes carriers and loading sequences Inventory assignments preparing picking and packing lists Warehouse picking and packing Updating the inventory file subtracting actual products picked Automatically printing replenishment lists Preparing shipping documents e g bills of lading Shipping products to customers Anticipatory Fulfillment Demand is supported by deploying inventory in anticipation of projected sales levels and location Anticipatory Forecast Order Inventory Deployment Inventory Replenishment or Reclamation Actual Demand When and How Much to Order Order Point Systems e g Min Max 2 Bin Visual Review Bin Marker Weeks of Supply Distribution Resources Planning DRP Economic Order Quantity Model EOQ Annual Cost Total Costs Inventory Carrying Costs Order or Set up Costs 60 Size of Order Quantity EOQ balances fixed order costs against inventory carrying costs to determine least costs order frequency to determine optimum order quantity For manufacturing settings substitute production set up costs for order costs Can be modified to accommodate volume transportation rates and purchase quantity discounts Ignores VARIANCE Na ve Reorder Point or Sawtooth Inventory Model EOQ 1 month Daily inventory level EOQ Average Inventory 0 5 month ROP Average Lead Time Average Daily



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