Related Research Articles
Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.
In economics, profit maximization is the short run or long run process by which a firm may determine the price, input and output levels that will lead to the highest possible total profit. In neoclassical economics, which is currently the mainstream approach to microeconomics, the firm is assumed to be a "rational agent" which wants to maximize its total profit, which is the difference between its total revenue and its total cost.
Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Print on demand (POD) is a printing technology and business process in which book copies are not printed until the company receives an order, allowing prints of single or small quantities. While other industries established the build to order business model, "print on demand" could only develop after the beginning of digital printing, because it was not economical to print single copies using traditional printing technology such as letterpress and offset printing.
Obsolescence is the state of being which occurs when an object, service, or practice is no longer maintained or required even though it may still be in good working order. It usually happens when something that is more efficient or less risky replaces it.
Kanban is a scheduling system for lean manufacturing. Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. The system takes its name from the cards that track production within a factory. Kanban is also known as the Toyota nameplate system in the automotive industry.
In operations research, the cutting-stock problem is the problem of cutting standard-sized pieces of stock material, such as paper rolls or sheet metal, into pieces of specified sizes while minimizing material wasted. It is an optimization problem in mathematics that arises from applications in industry. In terms of computational complexity, the problem is an NP-hard problem reducible to the knapsack problem. The problem can be formulated as an integer linear programming problem.
The beer distribution game is an educational game that is used to experience typical coordination problems of a supply chain process. It reflects a role-play simulation where several participants play with each other. The game represents a supply chain with a non-coordinated process where problems arise due to lack of information sharing. This game outlines the importance of information sharing, supply chain management and collaboration throughout a supply chain process. Due to lack of information, suppliers, manufacturers, sales people and customers often have an incomplete understanding of what the real demand of an order is. The most interesting part of the game is that each group has no control over another part of the supply chain. Therefore, each group has only significant control over their own part of the supply chain. Each group can highly influence the entire supply chain by ordering too much or too little which can lead to a bullwhip effect. Therefore, the order taking of a group also highly depends on decisions of the other groups.
Safety stock is a term used by logisticians to describe a level of extra stock that is maintained to mitigate risk of stockouts caused by uncertainties in supply and demand. Adequate safety stock levels permit business operations to proceed according to their plans. Safety stock is held when uncertainty exists in demand, supply, or manufacturing yield, and serves as an insurance against stockouts.
The economic lot scheduling problem (ELSP) is a problem in operations management and inventory theory that has been studied by many researchers for more than 50 years. The term was first used in 1958 by professor Jack D. Rogers of Berkeley, who extended the economic order quantity model to the case where there are several products to be produced on the same machine, so that one must decide both the lot size for each product and when each lot should be produced. The method illustrated by Jack D. Rogers draws on a 1956 paper from Welch, W. Evert. The ELSP is a mathematical model of a common issue for almost any company or industry: planning what to manufacture, when to manufacture and how much to manufacture.
The business terms push and pull originated in logistics and supply chain management, but are also widely used in marketing and in the hotel distribution business.
A business can use a variety of pricing strategies when selling a product or service. To determine the most effective pricing strategy for a company, senior executives need to first identify the company's pricing position, pricing segment, pricing capability and their competitive pricing reaction strategy. Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions.
The economic production quantity model determines the quantity a company or retailer should order to minimize the total inventory costs by balancing the inventory holding cost and average fixed ordering cost. The EPQ model was developed by E.W. Taft in 1918. This method is an extension of the economic order quantity model. The difference between these two methods is that the EPQ model assumes the company will produce its own quantity or the parts are going to be shipped to the company while they are being produced, therefore the orders are available or received in an incremental manner while the products are being produced. While the EOQ model assumes the order quantity arrives complete and immediately after ordering, meaning that the parts are produced by another company and are ready to be shipped when the order is placed.
Inventory investment is a component of gross domestic product (GDP). What is produced in a certain country is naturally also sold eventually, but some of the goods produced in a given year may be sold in a later year rather than in the year they were produced. Conversely, some of the goods sold in a given year might have been produced in an earlier year. The difference between goods produced (production) and goods sold (sales) in a given year is called inventory investment. The concept can be applied to the economy as a whole or to an individual firm, however this concept is generally applied in macroeconomics. Unintended unsold stock of goods increases inventory investment.
The sales order, sometimes abbreviated as SO, is an order issued by a business or sole trader to a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be fulfilled in several ways. Broadly, the fulfillment modes, based on the relationship between the order receipt and production, are as follows:
Build to Order is a production approach where products are not built until a confirmed order for products is received. Thus, the end consumer determines the time and number of produced products. The ordered product is customized, meeting the design requirements of an individual, organization or business. Such production orders can be generated manually, or through inventory/production management programs. BTO is the oldest style of order fulfillment and is the most appropriate approach used for highly customized or low volume products. Industries with expensive inventory use this production approach. Moreover, "Made to order" products are common in the food service industry, such as at restaurants.
Order fulfillment is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of distribution or the logistics function. In the broader sense, it refers to the way firms respond to customer orders.
Production leveling, also known as production smoothing or – by its Japanese original term – heijunka (平準化), is a technique for reducing the mura (unevenness) which in turn reduces muda (waste). It was vital to the development of production efficiency in the Toyota Production System and lean manufacturing. The goal is to produce intermediate goods at a constant rate so that further processing may also be carried out at a constant and predictable rate.
Frequent deliveries are a largely ignored but powerful way of leveling apparent demand within a supply chain and thereby reducing Mura. What is perhaps not so obvious is that this will reduce inventory levels and thereby assist progress along the Lean journey at the same time. The historical focus upon carrying full loads, sometimes of only one product, reduces the unit cost of transport but has sometimes hidden the true costs associated with achieving those transport discounts. It is also possible to gain some of these benefits by 'faking' frequent deliveries at the supply site.
Material theory is the sub-specialty within operations research and operations management that is concerned with the design of production/inventory systems to minimize costs: it studies the decisions faced by firms and the military in connection with manufacturing, warehousing, supply chains, spare part allocation and so on and provides the mathematical foundation for logistics. The inventory control problem is the problem faced by a firm that must decide how much to order in each time period to meet demand for its products. The problem can be modeled using mathematical techniques of optimal control, dynamic programming and network optimization. The study of such models is part of inventory theory.
References
- ↑ Parry, Glenn; Graves, Andrew (2008). Build to order: the road to the 5-day car. Springer. p. 3. ISBN 978-1-84800-224-1.
- ↑ "Build to Stock Inventory model". leanmanufacture.net. Retrieved 17 November 2011.
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