im lecture 1 & 2 (2 files merged)

Inventory Management

Dr. Najam Akber

Degree in Mechanical Engineering from NED

university, Karachi.

Served as a Maintenance Engineer in Al-Karam Textile

Mills, Karachi.

Briefly worked for Hinopak as a trainee engineer in

Karachi.

Served as a Production Engineer in Siemens Pakistan,

Karachi.

Served as an Assistant Manager in NDC, Islamabad.

MSc. Degree in Programmes and Project Management

from Univerisity of Warwick, UK (worked with Airbus

UK on the final research project).

One year research experience in the filed of

Leadership for Innovation in University of Bath, UK.

PhD degree in Manufacturing engineering

management from Loughborough University, UK.

Conducted a 10 weeks long case study in Rolls Royce,

UK.

Presented papers in UK, Sweden and Spain.

Serving currently as Manager Technical in NDC,

Islamabad

1. Anjum, N.A., Harding, J.A., Young, R.I.M. and Case, K., 2012, Manufacturability verification through feature based ontological

product models. Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering Manufacture, vol. 226 no.

6, pp 1086-1098

2. Anjum, N.A., Harding, J.A., Young, R.I.M. and Case, K., 2012, Mediation of foundation ontology based knowledge sources.

Computers in Industry, vol. 63, no. 5, pp 433 - 442

3. Anjum, N.A., Harding, J.A., Young, R.I.M, Case, K, Usman, Z., Changoora, N., 2012, Verification of Knowledge Shared across Design

and Manufacture Using a Foundation Ontology., International Journal of Production Research, [First review received in December

2012 with good comments and a few proposed changes]

4. Changoora, N., Gunendran, G., Young, R.I.M, Usman, Z., Anjum, N.A, Palmer, C., Harding, J.A, Case, K., and Cutting-Decelle, A.-F.,

2011. Extending product lifecycle management for manufacturing knowledge sharing. Proceedings of the Institution of Mechanical

Engineers, Part B: Journal of Engineering Manufacture [Submitted for review since September 2011].

5. Changoora, N., Gunendran, G., Young, R.I.M, Usman, Z., Anjum, N.A, Palmer, C., Harding, J.A, Case, K., and Cutting-Decelle, A.-F.,

2011A model-driven ontology approach for manufacturing system interoperability and knowledge sharing., Computers in Industry

[Submitted for review since May 2011]

6. Anjum, N.A., Harding, J.A. and Young, R.I.M., 2011. Shape feature based ontological engineering product models. In:

3rd International IFIP Working Conference on Enterprise Interoperability (IWEI). Stockholm, Sweden. March 23-24.

7. Young, R.I.M, Chungoora, N., Usman, Z., Anjum, N.A, Gunendran, G., Palmer, C., Harding, J.A, Case, K. and Cutting-Decelle, A.-F.,

2011. Reference ontologies for manufacturing based ecosystems. In: 3rd International IFIP Working Conference on Enterprise

Interoperability (IWEI). Stockholm, Sweden. March 23-24.

8. Anjum, N.A., Harding, J.A. and Young, R.I.M., 2010. Cross domain knowledge verification: Verifying knowledge in foundation

based domain ontologies. In: Proceedings of the International Conference on Knowledge Engineering and Ontology Development

(KEOD) Valencia, Spain. October 25-28.

9. Anjum, N.A., Harding, J.A., Young, R.I.M. and Case, K., 2010. Gap analysis of ontology mapping tools and techniques. In:

Popplewell, K., Harding, J.A, Poler, R. and Chalmeta, R., eds. Enterprise interoperability IV: Making the Internet of the future for

the future of enterprise Proceedings of the 6th International Conference on Interoperability for Enterprise Software and Applications (I-ESA). Coventry, UK. April 14-15. pp. 303-312. DOI: 10.1007/978-1-84996-257-5_28.

10. Young, R.I.M, Chungoora, N., Usman, Z., Anjum, N.A, Gunendran, G., Palmer, C., Harding, J.A, Case, K. and Cutting-Decelle, A.-F.,

2010. An exploration of foundation ontologies and verification methods for manufacturing knowledge sharing. In: Workshop on

Interoperability for Enterprise Software and Applications (I-ESA). Coventry, UK: University of Coventry. April 13.

Publications

Course Introduction

48

16

75%

?

?

25%

40%

15%

20%

Credit Hours

Weeks

Minimum attendance required

Quizzes

Home Assignments

Marks account for the Midterm Exams

Marks account for the Final Exam

Marks account for the Quizzes

Marks account for group activities and final

project

What is wrong with this map?

Sources of Learning

Books & Literature (including e-learning) Linkedin groups

Inventory Management Professionals

Inventory & Asset Management Network

Automotive Inventory Management

Group discussions Industrial visits On job experience

Recommended Books

Essentials of inventory management (2003) by Max Muller, published by American Management Association

Inventory Management Explained: A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems (2009) by David J.

Piasecki, published by Ops Publishing

Operations Management Body of Knowledge (OMBOK) by American

Production & Inventory Control

Society (APICS)

Operations & Production Management books

Rules of the Game

Maximum 10 minutes allowed for late arrivals after that attendance will not be marked

Why classrooms? Three levels of discourse in the class

The bookish knowledge Teahers eperiee Studets eperiee

Participation in group activities Questions are encouraged

Studets Itroductio

Groups Formation

You are a farmer taking a fox (or a wolf), a chicken (or a goose)

and a sack of grain to market (don't ask why you're taking a

fox to market) and you come across a river. The only way

across the river is by a small boat, which can only hold at most

you and one of the three items. Left unsupervised, the chicken

will eat the grain or the fox will eat the chicken (however, the

fox won't try to eat the grain, nor will the fox or the chicken

wander off). What's the quickest way to get everything across

the river?

Some fun

before we

start

Solution 1. Take the chicken across

2. Come back with the boat empty besides yourself

3. Take the grain (or the fox) across

4. Take the chicken back

5. Take the fox (or the grain) across leaving the chicken there

6. Come back with the boat empty besides yourself

7. Take the chicken across

Some fun

before we

start

Learning points: 1. There are limitations in keeping, carrying and holding

items in businesses.

2. For staying profitable, investment has to be made in doing

some extra work for making sure that the organizational

assets are safe and provide the necessary functions when

needed.

3. This extra work is Ivetory Maageet.

Some fun

before we

start

Course Outline

1. Inventory management basics

2. Tools of the trade

3. Forecasting

4. Safety stock

5. Order quantities / lot sizes

6. Ordering systems

7. Material / manufacturing / distribution resource planning

8. Measurements & analysis

Fundamental question of IM

When to order?

&

How much to order?

The ultiate ai is

Inventory Management Basics

Part 01

What is Inventory?

1. A complete list of the things that are in a place

2. An itemized list of current assets

3. The quantity of goods or materials on hand

4. A quantity of merchandise or goods held in stock

5. Ietor is listed as a asset o firs alae sheet and consists of the stocks or items needed to maintain

production, support activities such as maintenance and

repair, and provide customer service.

(OMBOK APICS)

How about man hours?

Part 01: Inventory Management Basics

In what tangible forms does inventory exist?

Raw materials

1

Finished

product

2

Work-in-process

(WIP)

3

Consumables

4

Service & Repair

(S&R) items

5


Some important terminologies

Pipeline (transit) inventory Cycle stock Anticipation stock Decoupling Safety stock Hedging Obsolescence SKU


Case Studies


Virgin cola was launched in 1994 starting from Great Britain It attempted to compete with Coca Cola Coca Cola sent a 747 full of its employees assigned to buy all

Virgin cola stock available in the market

This sudden vanishing of Virgin Cola from the market disturbed the supply and demand cycle and the existing

customer base was destroyed

Case Study I


Case Study II Ericsson was once one of the leading mobile handset manufacturers of its time Philips used to supply a certain cell phone component to Ericsson and Nokia In March 2000 a fire broke out in Philips plant destroying all the stocks and

production equipment

The initial estimate of repair was one week but it took 6 weeks in the end Nokia didt hae a ig stok aailale of these hips ut Erisso ere

complacent as they had a stock of almost 4 weeks available

Nokia were operating with a small inventory and therefore searched for alternatives and found some

Erisso aited for Philips ut sie the suppl didt start for a oth, the ra out of stocks and the balance of product supply and revenue generation was

disturbed

Ericsson had to be rescued by Flextronics and since then it is called Sony Ericsson


Is inventory good or bad?

Discuss in your groups


Inventory Management

Dr. Najam Akber

Advantages of keeping inventory

Increases predictability Caters for fluctuations in demand Counters for unreliable supplier Saves money on purchase of large quantities Saves money on purchase at a suitable point

in time

Saves ordering costs


Disadvantages of keeping inventory

Money is engaged Space is wasted Extra labor is required to:

Receive & check, store, account for, retrieve and deliver inventory

Stored items may get damaged, deteriorated or stolen


Suppliers

Allows procurement time to prepare purchase orders,

place orders, and control timing and modes of

delivery. Protects against uncertainties in lead times.

Procurement

(purchasing)

Procurement

(purchasing)

Provides time to plan and produce items while

procurement is interacting with suppliers. Prevents

downtime and allows for a continuous flow.

Production

Production Provides marketing with product to sell while

production is producing items for future sale. Marketing

Marketing Provides distribution with the product marketing has

sold. Immediate customer satisfaction. Distribution

Distribution Offers the intermediary items to deliver to the

consumer/end user Intermediary

Intermediary Satisfies the consumer/end user with product while it

is waiting for deliveries from the intermediary. Consumer /

End user

Decoupling Possibilities


So what is Inventory

Management then?


The actions taken to minimize the possibility of disruption

in the production schedule of a firm for want of raw

material, stock and spares at a minimum cost is called

inventory management.

So what is Inventory

Management then?


When to order?

&

How much to order?

Inventory Management Tasks

Forecasting Calculating safety stock Lot sizing Ordering / Replenishment Transactional control Inventory analysis


The PDCA cycle


Inventory planning and control

Planning on What

Inventory to

Stock and How to

Acquire It

Forecasting

Parts/Product

Demand

Controlling

Inventory

Levels

Feedback

Measurements

to Revise Plans and

Forecasts


Inventory planning and control


Game Brief


1. You are managing a plant for manufacturing empty plastic bottles for a

water filtration company.

2. Your maximum plant capacity is 2 million bottles per month

3. You have to deal with three different suppliers as follows:

i. Fantastic plastic The raw plastic supplier ii. Lovely labels The label supplying company iii. Comfy caps The bottle caps supplier

4. These suppliers have their weaknesses which means that they deliver on

time most of the time but things may go awry some times

5. Although not essential but you may want to keep some inventory levels at

every step of the supply chain just to deal with unpredictable

contingencies

6. The game will have maximum five rounds unless all the groups go

bankrupt

7. Use the following layout as the supply chain of your company

Bottle

Production Labeling Capping Packing

Raw plastic Labels Caps Packaging Material

3 PKR per unit 0.3 PKR per unit 0.3 PKR per unit Included in Fixed Costs

100 PKR per Kg 0.2 PKR per unit 0.2 PKR per unit Negligible value

(Including the material cost of

15 gm per unit)


Game Brief

8. Although the demand of bottles by the filtration company will be random,

the demand curve for 2013 can be used for production planning

00.5

1

1.5

2

2.5

3

3.5

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Nu

mb

er

of

Bo

ttle

s in

Mil

lio

ns

Demand of Bottles in 2013


9. You have a capital of 12 million PKR in the beginning

10. You can take a loan from the bank with service charges of 5% per annum

11. Fixed costs for the running of supply chain is 0.1 million PKR per month

12. You may select the following roles:

i. A CEO to approve all decisions

ii. A finance officer to look after the money matters

iii. A production manager to take care of raw material requirement and demand

fulfillment

iv. A store / inventory manager to keep an eye on the stocks level

v. A procurement manager to place orders

13. Work out the cash requirement for fulfilling the yearly demand. Use the

calculator provided

14. Production capacity of the plant cannot be increased

15. Inventory cannot be sold


Game Brief

Lets Start

Orders for March 2014


1.6 million units of bottles to be delivered

Timeout


CEOs present their figures

Lets Continue

Orders for April 2014


1.9 million units of bottles to be delivered

Ooops.. Part 01: Inventory Management Basics

Lovely labels have a fire broken out in their plant

which has left the plant dysfunctional for at least

two weeks. They will therefore only be able to

deliver 1 million units of bottle caps this month

Timeout


CEOs present their figures

im lecture 1 & 2 (2 files merged)

Documents

knowledge engineering

verification of knowledge

mechanical engineering

knowledge sources

international conference

airbus uk

manufacturing based

project management