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Cheatography

This is an exam cheat sheet

This is a draft cheat sheet. It is a work in progress and is not finished yet.

Process Analysis

if demand rate is less than process capacity, throughput rate and cycle time are given by demand rate'

Flow time = add all times of the process
Throughput rate = invent­ory­/time
Cycle time = time/i­nve­ntory
If there is an additional resource, the capacity of that part of the process doubles
Entire Process Time = Flow time + cycle time *(x-1)

Efficiency Frontier + Order Winners

Order Winners: Quality, Speed, Flexib­ility, and Price

Yield Loss

Little's Law

Inventory = Throughput Rate * Flow Time
Days of Inventory = (Inventory / COGS) * 365
Inventory Turnover = COGS/I­nve­ntory

Utiliz­ation

VUT

VUT

VUT Caveats

Inventory Buildup

Find total waiting time: area under the curve
  

Normal Distri­bution

z = (x-µ)/σ
x = zσ + µ
z = norm.s.inv(%)

Newsvendor Model

Newsvendor Model

round up rule (round up optimal order quantity)

Continuous Review Model

Discrete Distri­bution: find cumulative probab­ility, the quantity above the desired SL is your ROP

Continuous Review Model

Continuous Review Model: Event Triggered Order
Service level is qualified as satisfying customer demand
Rule: if inventory = ROP order EOQ
EP = Lead Time
ROP = d (units­/day) * L + zσ (L)
σL = σd√L

Economic Order Quantity (EOQ)

D = Demand rate (unit/yr)
C = Cost of purchasing a unit ($/unit)
S = Setup cost per order ($)
H = Annual Holding Cost per unit of inventory ($/unit *year)
H = iC
i = Annual percentage holding cost
Q = Quantity of an order (units)
Number of Orders per year = D/Q ( / yr)
Annual Fixed (setup) cost = (D/Q) * S ($/yr))
Average Inventory = Q/2 (units)
Annual Holding cost = (Q/2) * H ($/yr)
Annual purchasing cost = C * D ($/yr)
Qopt = √(2DS/H)
 

Inventory Holding Strategies

1. Inventory Pooling: centra­lizing inventory (keeping in one location)
2. Delayed differ­ent­iation: keeping inventory of a base model and postpone final differ­ent­iation of products

Periodic Review Model

Time Triggered Model: Order at specific time points
Exposure Period: time exposed to stock outs
Exposure Period = RP + LT
Review Period (RP): amount of time it between each order
Target Stock Level = E[D] in EP + SS
Rule: @ time to order, order up to target stock level
SS = zσ(d)
SL* = Cu / (Cu +Co)
Amt to Order = Target Stock Level - Inventory
Periodic review may be necessary if: Too diffic­ult­/ex­pensive to track current inventory (e.g. lack IT system) Supplier has bargaining power and/or capacity constr­aints → imposes order schedule Comple­x/rigid Shipping and Logistics Coordi­nating orders across multiple products from the same supplier

Continuous Review vs Periodic Review