Operations Management 2
- About
- Inventory Management
- NewsVendor Model
- Multiperiod inventory model
- Scheduling Algorithms
- Queueing Theory [WIP]
- References
About
Inventory Management
- Total Cost (per year) = Purchase Cost + Holding Cost + Ordering Cost
- Total Cost = CD + Average inventory size * H + Number of Orders * Ordering cost
Where,
- Q : Order Size (Variable)
- C : Cost per item
- D : Annual Demand / Rate of demand
- H : Holding Cost (i*C)
- S : Ordering Cost
- $Q^* = \sqrt{\dfrac{2DS}{H}}$
- $T^* = CD+\sqrt{2DSH}$
NewsVendor Model
- P (Selling Price) = 40
- w (Wholesale Price) = 30
- S (Salvage Price) = 10
- Cu (Underage Cost) = P - w = 10
- - Cost of stocking one less item
- Co (Overage) = w - S = 20
- - Cost of stocking one more item
Go on stocking as log as--
$Cu \times P(D>Q) \geq Co \times P(D \leq Q)$
$Cu \times (1-F(Q)) \geq Co \times F(Q)$
$\boxed{F(Q) \leq \dfrac{Cu}{Cu + Co} = \dfrac{P-w}{P-S}} = 0.33$
$E[demand] = E[sales] + E[lost sales]$
$E[\text{left over stock}] = Q - E[sales]$
> Where Q is the decided quantity to be restocked
$\text{Fill rate} = \dfrac{E[Sales]}{E[Demand]}$
Profits made by retailer :
$E[Profit] = Profits - Losses$
$E[Profits]= Cu \times E[Sales] - Co \times E[\text{left over stock}]$
Multiperiod inventory model
Cases:- Demand is uncertain
- Lead time is uncertain
- Demand and lead time both are uncertain
Scheduling Algorithms
- [ ] FCFS
- [ ] SPT : Shortest Processing Time
- [ ] EDD : Earliest Due Date
- [ ] SWPT : Smallest weighted processing time
- [ ] Critical Ratio Heuristic
- [ ] Hogson's Algorithm
Queueing Theory [WIP]
- [ ] M/M/1
- [ ] M/M/S
References
- Class notes. [Add book references here]