12 terms

ABC analysis

STUDY
PLAY
Created by
APICS
Divides
on hand inventory into 3 classes
Basis is annual £ volume:
£volume - annual D x unit cost
Policies
develop class a supplier more
give tighter physical control of a items
forecast a items more carefully
classification of class a
20% or so of high value items that count for around 80% of total stock value
classification of class b
next 30% or so of medium value items that count for around 10% of total stock value
classification of class c
last 50% or so low value items that count for around 10% of total stock value
Difference in way manage items at 3 diff levels.
Class C items use vendor managed inventory
= low value, high use and can back flush production on class B items
How to cope with late delivery of class a items
using the ABC policies
buffer stock
safety time
Explain buffer stock using the probabilistic model
model takes into account that there are demand and lead time variations
so make a replenishment order earlier
so on average there's always some stock in inventory (= buffer stock)
this means avoid stock-outs
Safety time is a way of
setting an ERP system so if demand of parts are due on the 14th of the month and safety time is 14 days then the stock arrives on the last day of the previous month
Safety time is
easier to set that buffer stock
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