Undergraduate Littlefield Game: Inventory Management Fixed-order quantity model with safety stock !!!!!!!!!!!!!!! "L#$%# "&I'( !!!!!!!!!!!!!!!! )ear students* +n the res,onsive game* you need to a,,ly what you have learned in inventory management* ie* you need to set u, the reorder ,oint &. and reorder quantity or economic order quantity #+/. ,ro,erly 0ou MU%( do the following analysis ana lysis on the first day of the game and show it to me on your re,ort Open your textbook (page 601). $ 1+2 (+ 3$L3UL$(# & &#+&)#& "+I'(. 3lick the 4customer orders5 icon on the L( we6 so that you can calculate: $verage num6er of 7o6s arriving each day 8 customer orders each day 8 daily demand 8 daily inventory usage 8 d 6ar %tandard deviation of daily demand 8 sigma d 1ow to do it9 Go to L( we6* then click the 4customer orders5 icon 4,lot 7o6 arrivals5 4download5 %ave on deskto, $fter that* o,en it using using #xcel and a,,ly the following formulas assuming you have ;< data or ;< days and your data starts at cell =>.: =AVERAGE (B1:B50) =STDEV(B1:B50)
If you do not have hav e ;< data or your data starts at a different cell* then modify the formulas accordingly $lthough your com,uter has Microsoft #xcel* in some cases your com,uter does not allow you to o,en the L( data 6y clicking 4+,en Using5 (wo ways to overcome this ,ro6lem: > #asy way: way: +,en it using using Microsoft Microsoft 2ord 2ord and then then co,y and ,aste ,aste into Micros Microsoft oft #xcel ? More diffic difficult ult way: way: +,en Microsoft Microsoft #xcelFile #xcelFile+,enL +,enLook ook in )eskto, )eskto, File File name: $ll files or !! 3lick the L( data+,en'ext'ext Finish "urchasing new inventory@raw material. lead time is L 8 A days constant. %igma L 8 %/&( L x sigma d. B?.
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(herefore* you must set your reorder ,oint & in 6atches. at least 8 demand during the lead time C safety stock Dequation >;;* ,age E<> 8 A x d 6ar C safety stock 2here safety stock 8 x sigma L $ssuming the customer demand follows the normal distri6ution and using the em,irical rule in statistics* if you set 8 H then you will cover JAK of the demand (herefore* if you use larger than H such as A or ;* most likely you always have enough raw material inventory* ie* no stock out 1owever* larger also means that you carry more inventories that cost your money I ex,lained this in class =
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(o find #+/* refer to exam,le >;A ,age E<<< 3 8 E<< ,er 6atch of E< kits 1 8 > year 8 HE; days ) 8 yearly demand 8 d 6ar x HE; /o,t in 6atches 8 #+/ in 6atches 8 %/&( ? x d 6ar x HE; x ><<< @ E<. Good luck &egards*
$hmad %yamil
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