Managing Flow Variability

Chapter 7: managing flow variability: safety live railway line 7.1 Objective In the front chapter on inventory, we focused on economies of scale as the major driver for inventory. The purpose of this chapter is to install the notion of safety inventory as a buffer against stochastic variability in supply / demand and discuss various levers for reducing it. The chapter is cover over two classes each of duration 100 minutes. In the first class, we first motivate the need for thinking as a way of estimating demand. We try the four key characteristics of forecast without getting into any details of forecasting methodologies. This is key since the strategies for managing inventories critically exploit these characteristics. The first two characteristics of a forecast emphasize the need to estimate the variability of demand in supplement to its mean. Building up on the examples of economic order measure model in chapter 6, we discuss the notion of rakehell-outs (when demands become uncertain), introduce the cycle service level measure, and derive the safety stock as a buffer against uncertain demand to run a certain service level. The key determinants of safety stock demand variability and the mean and the variability of replenishment clue time - are emphasized.

These are positioned as primary levers. Subsequently, the trey characteristic of forecast (the aggregation principle) is used to discuss the ideal of physical centralization of stocks as a way to turn off safety stock without affecting the cycle service level. other manifestations of this principle in terms of virtual centralization, substitution, specialization, and component commons are discussed qualitatively. Discussion of periodic review models can as well as be introduced here. Either this can be through shortly after the basic model for continuous review is done (so there is a direct contrast) or after complete the discussion of centralization concepts. In the second class, we emphasize the last... If you deficiency to get a full essay, order it on our website: Orderessay

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