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Supply Chain Management: Inventory Management

Supply Chain Management : InventoryManagementDonglei DuFaculty of Business Administration, University of New Brunswick, NB Canada FrederictonE3B 9Y2 (UNB)SCM1 / 83 Table of contents I1 Introduction2 Inventory Management3 Inventory models4 Economic Order Quantity (EOQ)EOQ modelWhen-to-order?5 Economic Production Quantity (EPQ): model descriptionEPQ model6 The Newsboy Problem-Unknown demand (probabilistic model)The newsvendor model7 Multiple-period stochastic model: model description8 Managing Inventory in the Supply chainDu (UNB)SCM2 / 83 Section 1 IntroductionDu (UNB)SCM3 / 83 Outline I1 Introduce some basic concepts in Inventory managementInventory level (IL)Reorder point (ROP)Lead timeSafety stockContinuous review and periodic review systemsService level2 Introduce some basic Inventory models, both deterministic models1 EOQ model2 EPQ modelprobabilistic models1 Single-period mo

What is inventory management? The objective of inventory is to achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds. Level of customer service: (1) in-stock ( ll) rate (2) number of back orders (3) inventory turnover rate: the ratio of average cost of goods sold to average inventory investment

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