The calculation sheet will assist you to determine optimized reorder points and reorder quantities of your inventoried part, based on the Q,r Inventory Model.
To begin, you will need the following information:
Demand/Year (EAU): Annual projected demand for the part, or estimated annual usage (EAU)
Lead Time (in years): lead time in unit of years
Setup Cost: Costs for scheduling jobs irrespective of the quantity produced, For example, cost of labor required to load material or set up tools in between jobs.
Manufacturing Cost/Unit OR Purchase Cost/Unit: Cost of production of the part including material and direct labor cost, or, part cost on purchase orders.
Holding Cost/Unit: Cost to hold the inventory, can be calculated by calculating the warehouse cost divided by total storage locations, then multiplying that value into the number locations assigned to the part, then dividing that value into the number of parts stored in the location.
Stockout Cost/Unit: Cost of stockout for the part. For example, the extra cost spent in buying the part from another vendor at a retail price, or the cost of expediting the order by offering overtime to the workers. This cost is difficult to gauge, as some costs may not be directly visible, for example, customer satisfaction and relations.
Comments