In inventory control our aim is to manage inventory in such a manner that day to day working run smoothly without any delay but at the minimum of cost.
Deterministic Models or Economic Order Quantity or Harris Wilson model or Infinite Rate of Replenishment
The ordering quantity Q* where holding cost becomes equal to ordering cost and total inventory cost is minimum is known as economic order quantity [EOQ].
only for EOQ
only for EOQ
When holding cost is given in terms of interest or % it always correspond to unit price of inventory and interest rate should be always yearly.
Ch = i % of C
EOQ with price break or Quantity discount
In this problem, first we compute feasible EOQ and then total cost is computed at EOQ and next higher order size having price break whenever the total cost comes out to be minimum gives the best order size.
Q: Quantity to be produced/manufactured in every set up (unit/setup)
C0: (Rs/setup) cost of each set up
tP: production/manufacturing time
P: production/built-up rate
d: demand/consumption rate
Qm = Q(p-d/p)
TVC = Setup cost (S.C.) + Holding cost (H.C.)
S.C. = No. of setup × cost/setup
SC = D/Q x Co
Production factor > 1
case when P→∞
S.C. = H.C.
Annual SC = S2/2Q.Cb
Probabilistic Models
Re-order level = Average demand during LT (ADDLT) + Safety Stock (SS)
Qavg = Q/2 + SS
Service Level Model
This model is preferred when the different cost factor involved with inventory are not known exactly it is based upon probability theory and amount of safety stock is kept according to level of service management wants to active.
Service Level = Number of units Supplied without delay/total number of units demanded
When the demand during lead time may be approximated by a normal distribution with certain avg. and std. deviation (s), then re-order level is given by,
ROL = + Zσ
1. ABC Control (Always better control)
2. VED (Vital essential & desirable)
3. HML (High Medium & Law)
4. SDE (Source difficult & Easy)
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1. What is inventory control in mechanical engineering? |
2. Why is inventory control important in mechanical engineering? |
3. What are the common challenges in inventory control for mechanical engineering companies? |
4. What are some inventory control techniques used in mechanical engineering? |
5. How can technology aid in inventory control for mechanical engineering companies? |
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