Inventory Control System
FNSD - Based on usage rate of items (cont.):
- The items, which have high demand and frequently indented, are kept very nearer to storekeeper, so that the handling time is reduced.
- Slow moving items or item, which has low demand, can be kept at a distance so that they will not cause inconvenience for the movement of store personnel.
- D class items are moved to disposal cell, to dispose by auction.
- The inventory system may be classified depending on the nature of variables. The variables are various costs, such as Carrying cost (C1), Shortage cost (C2), Ordering Cost (C3), demand, Lead time, Reorder cycle time, Input rate and shortages.
- The cost elements C1, C2, and C3 per time period and the unit price of the item may be constant or variable in an inventory system.
- Demand may be known and constant (static) or known and variable (dynamic) or it may be estimated one in an inventory system.
Inventory models may also be classified as follows:
Notations used in the mode
q = Lot size for one time interval for purchase models and for one run or cycle for manufacturing model.
r = Rate of demand or quantity required for one unit of time.
k = The rate of production or rate of supply of items to the inventory or rate of replenishment of inventory.
S = Level of inventory.
z = A level of inventory of short items i.e. unsatisfied demand.
t = Time interval between two consecutive replacements of inventory.
C (q) = Total inventory cost per unit of time as a function of level of inventory, q.
T = Time period in units for which the optimal policy is to be determined or Time horizon.
R = The total replenishment for the time T.
p (r) = Probability density function for ‘r’, in case of discrete items of quantity.
f (r) = Probability density function for ‘r’, in case of continuous units of quantity.
q_{0}, t_{0} , S0 = Optimal values of q, t, S respectively, i.e. the value for which the cost is minimum.