Multiple criteria ABC inventory classification using two virtual items

ABC inventory classification is one of the most popular techniques for organisations to efficiently plan and control thousands of inventory items. Its traditional way is solely based on a single criterion; however, it has been recognised that multiple criteria need to be considered in practice. An alternative approach to multiple criteria inventory classification (MCIC) is proposed by using two virtual items and incorporating the TOPSIS. The proposed approach improves some previous allied methods as it provides a more reasonable and comprehensive performance index and a unique inventory classification without any subjectivity. Comparisons with other allied methods are illustrated through a case study.     

Multi-criteria ABC inventory classification with mixed quantitative and qualitative criteria

Large firms usually employ the well-known ABC inventory classification technique to have an efficient control on a huge amount of inventory items. While the traditional inventory classification method only considers one criterion, namely the annual dollar usage to classify inventory items, the recent literature shows a focus on multi-criteria inventory classification (MCIC) techniques. Surprisingly, among several methods that have been developed for the MCIC problem, there are just a few, which clearly account for qualitative criteria, while most of the affecting criteria are of qualitative type in nature. This paper presents a modified linear optimisation method that enables inventory managers to classify a number of inventory items in the presence of both qualitative and quantitative criteria without any subjectivity. Furthermore, an efficient procedure is proposed to maximise the minimum importance attached to various criteria leading to improvement of discriminating power among inventory items. For validating the proposed method, it is applied on a case study taken from the literature and a comparative study with the existing competent methods is also provided.     

Spare parts failure prediction of an automobile under criticality condition

Many studies on spare parts planning classified items based on the levels of importance using conventional approaches. Classification of spare parts based on the stated approach without considering failure value and/or its consequence may not withstand the test of time due to continuing technological advancement or environmental degradation. This study solved the stated problem by developing a system that is capable of dynamically determining critical equipment/spare parts based on failure rates using ABC analysis. In this analysis, all operable items were considered to be non-critical and they became critical when they approached failure time. These transitions were prompted by items’ failure conditional probability within the limits of 1, 2/3, 1/3 for highly critical, critical and less critical items, respectively. The most critical item(s) (A class) with highest failure value/consequence were sorted out based on specificity (one manufacturer’s item) and generality (many manufacturers’ item). Failure remedy was achieved by applying modified classical inventory model which considered heterogeneity in item failure. The stated conditions were integrated into a time series, linear regression model. The performance evaluation results showed that the new scheme was efficient in spare part failure criticality classification, consequence analysis and remedy. The practical implication of the findings indicated that the developed system could serve as a suitable alternative to the static classification style of the conventional approach in term of cost savings.     

作业成本分析法在BPR中的应用研究

本方法是应用作业成本分析法(ABC法)解决目前企业在业务流程中存在的问题,但又不是严格遵循ABC法的计算方法,而是从产品是否增值的角度来分析业务流程中的作业及其动因类型,及应用ABC法进行业务流程重构(BPR)的方法。结合具体企业案例,运用ABC法对该企业的采购、销售及库存等物流业务流程进行了重构。结果表明,ABC法具有简化业务流程、提高业务流程运作效率和降低成本的作用。案例分析可为实施BPR的企业提供参考。     

Economic production quantity models for deteriorating items with rework and stochastic preventive maintenance time

Economic production quantity (EPQ) models for deteriorating inventory have been investigated by many researchers in recent years. In this paper, we develop EPQ models for deteriorating items with rework and stochastic preventive maintenance time. The models are solved using a search method, since a closed form solution cannot be derived. A numerical example and sensitivity analysis are provided to evaluate the models. The sensitivity analysis shows that the deteriorating cost has a significant effect on the optimal inventory cost; however, the production and the demand rate have the most significant effect on the optimal total cost and the optimal production up-time period.     

零件中心备件库存分类控制的研究

分析了库存ABC分类法存在的问题,提出了基于客户服务水平的库存ABC分类法,给出了相应的订货点、安全库存和订货量的计算模型,实现了提高顾客服务水平、降低库存成本的目标。     

作业成本法的经济生产批量模型

应用作业成本法(ABC)于传统的经济生产批量问题.这一模型不仅考虑了库存补货成本、库存持有成本和缺货成本,同时还考虑了生产批量和生产周期成本.通过Lingo进行数值计算,结果显示新模型优于传统的模型.     

基于作业成本法的医疗物资TCO优化模型

针对传统医疗物资采购主要关注采购价格、忽视医疗物资供应链成本这一问题,提出了一种结合作业成本法(ABC)与总体拥有成本(TCO)理论的医疗物资TCO优化模型。首先,运用ABC详细分析并核算医疗物资供应链成本,如供应商维持成本、质量检验成本、运输成本及手术延期成本等;然后,通过建立医疗物资TCO优化模型优化医疗物资采购策略。最后,通过分析天津市某三级甲等医院医疗物资采购案例,证明本模型可以有效地降低医疗物资采购成本,并为医院成本控制管理提供合理建议。     

Analysing optimum push/pull junction point location using multiple criteria decision‐making for multistage stochastic production system

This research focuses on solving the multistage process push/pull junction point location problem. An aim is to implement a hybrid push/pull production system that can satisfy both high service‐levels and low inventory levels. Simultaneously, we consider sophisticated variability, such as multi‐products, random setup, indiscriminate break‐downs, yield loss, batch processes, and other contingencies. The problem can be solved by a multiple criteria decision‐making (MCDM) method. A technique for order‐preference by similarity‐to‐ideal solution (TOPSIS) is used to select a suitable option. The optimisation involves evaluation of stochastic performance measures within alternative scenarios among candidate junction‐point locations using a discrete event simulation model. A practical thin film transistor‐liquid crystal display (TFT‐LCD) process case‐study is utilised to illustrate the proposed method. After implementing a hybrid push/pull production strategy, simulation results indicate that the inventory level was reduced by over 18% while the service level remained about the same. For another scenario, a 3.4% decrease in service‐level can be paid off by a 46% decrease in inventory level and 34% improvement in lead time.     

Economic evaluation of disassembly processes in remanufacturing systems

A model to deal with the disassembly processes in remanufacturing systems is presented with focus being on evaluating their economic consequences. More specifically, the model assists decisions such as to which degree and for the sake of which components should the returned items be disassembled. Consequently, using the economic values of recoverable items, the inventory holding costs of these items are obtained. This information is further used to determine the inventory control policy. To access such economic values, the above average cost approach is compared with the net present value method. The latter is often considered a more?‘correct’?way in remanufacturing systems from the viewpoint of inventory control. The results from the economic evaluation model are intended to aid companies in systematically evaluating current as well as projected remanufacturing systems.     

Optimal inventory control of lumpy demand items using (s,S) policies with a maximum issue quantity restriction and opportunistic replenishments

This paper presents a modified (s, S) inventory model which describes the characteristics of an inventory system with lumpy demand items. A maximum issue quantity restriction of w units and a critical inventory position of A units are incorporated into the inventory control policy. Customer orders with demand sizes larger than the maximum issue quantity will be filtered out from the inventory system and satisfied by using special replenishment orders in order to avoid disruption to the inventory system. The option of opportunistic replenishments is introduced to further minimize the total replenishment cost. An opportunistic replenishment is initiated if the level of the current inventory position is equal to or below the critical level when a customer demand with a size exceeding the maximum issue quantity arrives, which does not only initiate a direct shipment to the customer, but also raises the inventory position to S. Two effective algorithms are developed to determine the optimal values of w, A, s and S simultaneously. The first algorithm is based on the branch-and-bound tree search technique, and the second one is based on the concept of genetic algorithms. Numerical examples are used to illustrate the effectiveness of the algorithms developed. The effects of changes in the cost and system parameters on the optimal inventory control policy are also studied by using sensitivity analysis.     

An Economic Order Quantity Model with Demand-Dependent Unit Production Cost and Imperfect Production Processes

The classical economic order quantity (EOQ) model assumes that items produced are of perfect quality and that die unit cost of production is independent of demand. Product quality is not always perfect but directly affected by the reliability of the production process used to produce the products. In addition, a relationship between unit production cost and demand may exist under certain circumstances. We propose an EOQ model with demand-dependent unit production cost and imperfect production processes. We formulate this inventory decision problem as a geometric program (GP) and solve it to obtain closed-form optimal solutions. An illustrative example is provided to demonstrate the point that GP has potential as a valuable analytical tool for studying a certain class of inventory control problems. We also discuss the aspect of sensitivity analysis based on the GP approach.     

A methodological concept for phase change material selection based on multiple criteria decision analysis with and without fuzzy environment

Selection of proper phase change material (PCM) plays an important role towards the development of a latent heat thermal energy storage system. Selection of the phase change material is a difficult and restrained task due to the immense number of different available materials having different characteristics. One has to select such PCM which will give the desired thermal performance at minimum cost. This study deals with two Multiple Attribute Decision-Making (MADM) methods to solve PCM selection problem. These two methods are technique for order preference by similarity to ideal solution (TOPSIS) method and fuzzy TOPSIS method that uses linguistic variable presentation and fuzzy operation. Both the methods use an analytic hierarchy process (AHP) method to determine weights of the criteria. TOPSIS and fuzzy TOPSIS methods are used to obtain final ranking. A problem to evaluate the best choice of PCM used in solar domestic hot water system is considered here to demonstrate the effectiveness and feasibility of the proposed model. Empirical results showed that the proposed methods are viable approaches in solving PCM selection problem. TOPSIS is suitable for the use of precise performance ratings while the fuzzy TOPSIS is a preferred technique when the performance ratings are vague and inaccurate.     

Economic batch quantity in a multi-stage production system

A mathematical model has been developed in this paper for determining the total annual variable cost for a product which requires processing on a number of production stages. The demand for the product is assumed uniform over time and it is manufactured in equal lot sizes. In order to minimize the manufacturing cycle time of o production lot, the movement of the items between production stages is in sub-batches of equal sizes, As a result of manufacturing a production lot in sub-batches, the following additional costs are incurred: (1) additional cost of stock holding for process inventory; (2) cost of transporting sub-batches; (3) cost of multiple set-ups. A simple method is then adopted for minimizing the total annual variable cost of the multistage production system. An example has been solved to illustrate the method.     

Activity-based costing in flexible manufacturing systems with a case study in a forging industry

The objective of this paper is to apply the activity-based costing (ABC) approach together with traditional costing (TC) for parts costing in flexible manufacturing systems (FMS) with the A(2) level of automation. We propose a new model for the implementation of ABC using the product cost tree concept. First, the required resources and activities for each part are recorded, and then their costs are calculated using the appropriate cost formulae. This model was applied in a forging industry. A comparison and analysis between ABC and TC was then carried out based on the computational results obtained from the case study. The results indicate that the ABC outputs are more reliable than the TC outputs, and thus the ABC approach is a more acceptable tool for parts costing in FMS.     

A study of an integrated inventory with controllable lead time

The Japanese experience of Just-in-Time (JIT) production has shown that there are advantages and benefits associated with the efforts to reduce inventory lead time and the associated inventory cost. The length of lead time directly affects the customer service level, inventory investment in safety stock, and the competitive abilities of a business. In most of the literature dealing with inventory problems, either a deterministic model or probabilistic model, lead time is viewed as a prescribed constant or a stochastic variable, and is not subject to control. However, in many practical situations, lead time can be reduced by an additional cost. Moreover, the successful implementation of JIT production in today's supply chain enviromnent requires a new spirit of cooperation between the buyer and the vendor (Goyal and Srinivasan 1992). A desirable condition in long time purchase agreements in such a manufacturing environment is the frequent delivry of small quantities of items so as to minimize inventory holding cost for the buyer. The vendor also needs to minimize his or her total inventory costs. An integrated inventory model that allows the two trading parties to form a strategic alliance for profit sharing may prove helpful in breaking down the traditional barriers. This paper presents an integrated inventory model with controllable lead time. The model is shown to provide a lower total cost and shorter lead time compared with those of Banerjee (1986) and Goyal (1988), and is useful for practical inventory problems.     

Robustness of the partitions in grouping multi-item inventories

A recent work obtained closed-form solutions to the.problem of optimally grouping a multi-item inventory into subgroups with a common order cycle per group, when the distribution by value of the inventory could be described by a Pareto function. This paper studies the sensitivity of the optimal subgroup boundaries so obtained. Closed-form expressions have been developed to find intervals for the subgroup boundaries for any given level of suboptimality. Graphs have been provided to aid the user in selecting a cost-effective level of aggregation and choosing appropriate subgroup boundaries for a whole range of inventory distributions. The results of sensitivity analyses demonstrate the availability of flexibility in the partition boundaries and the cost-effectiveness of any stock control system through three groups, and thus also provide a theoretical support to the intuitive ABC system of classifying the items.     

Simulation of an integrated age replacement and spare provisioning policy using SLAM

This paper presents a SLAM simulation model for determining a jointly optimal age replacement and spare part provisioning policy. The policy, referred to as a stocking policy, is formulated by combining age replacement policy with a continuous review (s, S) type inventory policy, where s is the stock reorder level and S is the maximum stock level. The optimal values of the decision variables are obtained by minimizing the total cost of replacement and inventory. The simulation procedure outlined in the paper can be used to model any operating situation having either a single item or a number of identical items. Results from a number of case problems specifically constructed by 5-factor second order rotatory design have been presented and the effects of different cost elements, item failure characteristics and lead time characteristics have been highlighted. For all case problems, optimal (s, S) policies to support the Barlow-Proschan age policy have also been determined. Simulation results clearly indicate the separate optimizations of replacement and spare provisioning policies do not ensure global optimality when total system cost has to be minimized.     

物料采购看板在船用设备企业的应用

根据船舶制造业的特点,通过对原有物料控制方法的分析,找出物料控制方法中存在的问题。运用ABC分析和统计分析的方法确认需要使用看板控制的物料;提出了在物料需求不稳定的情况下计算采购看板数量的方法,通过设计的采购看板系统达到了降低原材料库存的目的。     

Designing and computing optimal policies on a production model for non-instantaneous deteriorating items with shortages

This paper discusses a production model for non-instantaneous Weibull deteriorating items with complete backlogging over an infinite time horizon and also extended to the finite time horizon. The model is studied under the production policy starting with shortages. The objective of this model is to minimise the total cost to the manufacturer which is the sum of the setup cost, production cost, holding cost and shortage cost. Finally, numerical examples are given to illustrate the real-life applications of the proposed model. Sensitivity analyses of the major inventory parameters are carried out. Some useful managerial applications are obtained by using sensitivity analysis.