Example 12-1
Evaluating Cycle Service Level Given a Replenishment Policy (Example 12-1)
Inputs
Average demand per unit time D =
2,500
Reorder Point
ROP
Safety Inventory
ss = ROP – DL
Average
Inventory
Average
Flow Time
5000 0 5000 2.00
5010 10 5010 2.00
5020 20 5020 2.01
5030 30 5030 2.01
Column D contains average flow time
Example 12-1
Reorder Point
ROP
Safety Inventory
ss = ROP – DL
Average
Inventory
Average
Flow Time
5360 360 5360 2.14
5370 370 5370 2.15
5380 380 5380 2.15
5390 390 5390 2.16
5400 400 5400 2.16
Example 12-1
Reorder Point
ROP
Safety Inventory
ss = ROP – DL
Average
Inventory
Average
Flow Time
5810 810 5810 2.32
5820 820 5820 2.33
5830 830 5830 2.33
5840 840 5840 2.34
5850 850 5850 2.34
5860 860 5860 2.34
5870 870 5870 2.35
5880 880 5880 2.35
Example 12-1
Reorder Point
ROP
Safety Inventory
ss = ROP – DL
Average
Inventory
Average
Flow Time
6260 1260 6260 2.50
6270 1270 6270 2.51
6280 1280 6280 2.51
6290 1290 6290 2.52
6300 1300 6300 2.52
Example 12-1
Reorder Point
ROP
Safety Inventory
ss = ROP – DL
Average
Inventory
Average
Flow Time
6710 1710 6710 2.68
6720 1720 6720 2.69
6730 1730 6730 2.69
6740 1740 6740 2.70
Example 12-2
Evaluating Cycle Service Level Given a Replenishment Policy (Example 12-2)
Inputs
Average demand per unit time D = 2,500
Lot size Q = 10,000
Intermediate Calculation
Reorder Point Increment = 10
Reorder
Point ROP
Safety
Inventory ss
= ROP – DL
CSL (Equation
12.4)
Average
Inventory
Q/2 + ss
Average
Flow Time
5000 0 0.500 5000 2.00
5010 10 0.506 5010 2.00
5020 20 0.511 5020 2.01
5030 30 0.517 5030 2.01
5040 40 0.523 5040 2.02
𝐶𝑆𝐿 𝐶𝑜𝑙𝑢𝑚𝑛 𝐶 = 𝑁𝑂𝑅𝑀𝐷𝐼𝑆𝑇
(
𝑅𝑂𝑃, 𝐷𝐿, 𝜎𝐿, 1
)
Example 12-2
Reorder
Point ROP
Safety
Inventory ss
= ROP – DL
CSL (Equation
12.4)
Average
Inventory
Q/2 + ss
Average
Flow Time
5350 350 0.690 5350 2.14
5360 360 0.695 5360 2.14
5370 370 0.700 5370 2.15
5380 380 0.705 5380 2.15
5390 390 0.709 5390 2.16
5400 400 0.714 5400 2.16
5410 410 0.719 5410 2.16
5420 420 0.724 5420 2.17
5430 430 0.728 5430 2.17
5440 440 0.733 5440 2.18
5450 450 0.738 5450 2.18
5460 460 0.742 5460 2.18
Example 12-2
Reorder
Point ROP
Safety
Inventory ss
= ROP – DL
CSL (Equation
12.4)
Average
Inventory
Q/2 + ss
Average
Flow Time
5830 830 0.880 5830 2.33
5840 840 0.883 5840 2.34
5850 850 0.885 5850 2.34
5860 860 0.888 5860 2.34
5870 870 0.891 5870 2.35
5880 880 0.893 5880 2.35
5890 890 0.896 5890 2.36
5900 900 0.898 5900 2.36
5910 910 0.901 5910 2.36
5920 920 0.903 5920 2.37
Example 12-2
Reorder
Point ROP
Safety
Inventory ss
= ROP – DL
CSL (Equation
12.4)
Average
Inventory
Q/2 + ss
Average
Flow Time
6310 1310 0.968 6310 2.52
6320 1320 0.969 6320 2.53
6330 1330 0.970 6330 2.53
6340 1340 0.971 6340 2.54
6350 1350 0.972 6350 2.54
6360 1360 0.973 6360 2.54
Example 12-2
Reorder
Point ROP
Safety
Inventory ss
= ROP – DL
CSL (Equation
12.4)
Average
Inventory
Q/2 + ss
Average
Flow Time
6790 1790 0.994 6790 2.72
6800 1800 0.995 6800 2.72
6810 1810 0.995 6810 2.72
Example 12-3
Evaluating Safety Inventory Given Cycle Service Level (Example 12-3)
Input
Demand per period (week), D = 2500 boxes
Replenishment lead time, L = 2 weeks
Desired Cycle Service Level is set in Cell D6