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    Inventory Models

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    Kalpesh Barde
    This presentation discusses deterministic inventory models, including the Wilson-Harris or economic order quantity (EOQ) model, production model, and EOQ model with shortages. The EOQ model assumes known demand, uniform demand, instant replenishment, and no shortages. It determines the optimal order quantity to minimize total costs. The production model considers gradual replenishment from production. The EOQ model with shortages allows for shortages and determines the optimal order quantity and backorders to balance inventory and shortage costs.

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    Download as PPTX, PDF, TXT or read online from Scribd

    Inventory Models

    Uploaded by

    Kalpesh Barde
    235 views10 pages
    This presentation discusses deterministic inventory models, including the Wilson-Harris or economic order quantity (EOQ) model, production model, and EOQ model with shortages. The EOQ model assumes known demand, uniform demand, instant replenishment, and no shortages. It determines the optimal order quantity to minimize total costs. The production model considers gradual replenishment from production. The EOQ model with shortages allows for shortages and determines the optimal order quantity and backorders to balance inventory and shortage costs.

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    its a ppt about various deterministic models in inventory control.

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    This presentation discusses deterministic inventory models, including the Wilson-Harris or economic order quantity (EOQ) model, production model, and EOQ model with shortages. The EOQ model assumes known demand, uniform demand, instant replenishment, and no shortages. It determines the optimal order quantity to minimize total costs. The production model considers gradual replenishment from production. The EOQ model with shortages allows for shortages and determines the optimal order quantity and backorders to balance inventory and shortage costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    235 views10 pages

    Inventory Models

    Uploaded by

    Kalpesh Barde
    This presentation discusses deterministic inventory models, including the Wilson-Harris or economic order quantity (EOQ) model, production model, and EOQ model with shortages. The EOQ model assumes known demand, uniform demand, instant replenishment, and no shortages. It determines the optimal order quantity to minimize total costs. The production model considers gradual replenishment from production. The EOQ model with shortages allows for shortages and determines the optimal order quantity and backorders to balance inventory and shortage costs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    Presentation on

    DETERMINISTIC MODELS IN INVENTORY CONTROL


    Prepared by - Kalpesh Barde B.E Mechanical Roll no:-104

    INVENTORY MODELS
    Inventory models are the different technical methods used to determine order quantity which minimizes the total costs (i.e. ordering cost + inventory carrying cost)

    DIFFERENT INVENTORY MODELS


    Inventory models

    Deterministic

    probabilistic

    Wilson harry model or E.O.Q model

    Production model

    E.O.Q model with shortages

    WILSON-HARRIS MODEL OR E.O.Q MODEL


    This model is used when the demand is known with certainty. Assumptions in this model are:1) Uniform demands. 2) Instantaneous replenishment. 3) Shortages are not allowed. 4) Quantity discounts are not allowed.
    MAX.DEMAND

    Consumption rate

    Average inventory

    QUANTITY

    TIME

    WILSON-HARRIS MODEL OR E.O.Q MODEL


    Notations:D = annual demand (units/year) Co= ordering cost (units/annum) Ch =inventory carrying cost Cp = price per unit Q = Order quantity Q* = Economic order quantity N = No. order placed per annum Tc = Total cost per annum Tcm= Minimum total cost
    1) Total ordering cost = no. of orders X ordering cost/order = (D/Q) X Co

    2) Annual inventory = avg. inventory X inventory carrying cost carrying cost =( Q X Ch ) 2


    3) Economic order quantity (Q*) = (2DCo) Ch

    4) Minimum total cost Tcm=

    2 D Co Ch

    5) Optimum no. of orders (N*) = D/Q* 6) Time interval between = no. of working days in a year two orders N*

    PRODUCTION MODEL
    Max. inventory level STOCK LEVEL (QUANTITY)

    If the item is produced within the company itself. Its batch size is decided by production model.
    Assumptions in this model are:1) Uniform demand rate. 2) Gradual replenishment. 3) Set up cost is fixed and it does not change with lot size.

    tp T

    tc

    Time

    PRODUCTION MODEL
    Notations:D = annual demand (units/year) Co= ordering cost (units/annum) Ch =inventory carrying cost Cp = price per unit Q = Order quantity Q* = Economic order quantity N = No. order placed per annum Tc = Total cost per annum P= production rate d=consumption rate T= Cycle time P-d = inventory build up rate tp= production period
    Max. inventory at the end of production run = (p-d) tp Quantity produced during production period (Q) = p tp Average inventory = (p-d) tp = Q 2 2 Annual inventory carrying cost = Q 2 1- d p 1- d p Ch

    Economic order quantity (Q*) =

    2D Co (1-d/p) Ch

    Optimal total cost (Tcm) =

    2 D Co Ch (1-d/p)

    Optimal no. of production run (N*) = D/Q*

    E.O.Q MODEL WITH SHORTAGES


    This model is used when shortages are faced by company.
    Max. inventory level

    Assumptions in this model are: Uniform demand rate. Instantaneous replenishment. Shortages are allowed. Quantity discounts are not allowed.

    QUANTITY

    t2

    Q-S t1

    TIME

    E.O.Q MODEL WITH SHORTAGES


    Notations:Cs= shortage cost per unit per period S= Balance unit after back units are satisfied Q-S = number of shortages per order t1 = time period during which inventory is positive t2 = time during which shortage exists T = time between the receipt of orders Q* = Economic order quantity S* = Optimal remaining units after back ordering Q*-S*= optimal amount back ordered Tcm = total optimal inventory cost

    Q* =

    2 D Co (Cs+Ch) Ch Cs

    S* =

    2 D Co Cs Ch (Cs+Ch)

    Q*- S* = Q* 1 Cs (Ch+Cs)

    Tcm =

    2 D Co Ch

    Cs Ch+ Cs

    THANK YOU . . . !!!

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