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Spare Part Inventory Analysis Report: Normal Distribution-Curve EOQ Model

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Ranjan Shankar

The document analyzes inventory levels and reorder points for spare parts. It provides details on demand history, costs, lead times, and calculations for economic order quantity and reorder point. The analysis recommends that the reorder point be the minimum and the maximum include both reorder point and economic order quantity.

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© All Rights Reserved
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Spare Part Inventory Analysis Report: Normal Distribution-Curve EOQ Model

Uploaded by

Ranjan Shankar
34 views1 page
The document analyzes inventory levels and reorder points for spare parts. It provides details on demand history, costs, lead times, and calculations for economic order quantity and reorder point. The analysis recommends that the reorder point be the minimum and the maximum include both reorder point and economic order quantity.

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Material

Original Title

000014085

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© © All Rights Reserved

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The document analyzes inventory levels and reorder points for spare parts. It provides details on demand history, costs, lead times, and calculations for economic order quantity and reorder point. The analysis recommends that the reorder point be the minimum and the maximum include both reorder point and economic order quantity.

Copyright:

© All Rights Reserved
Download as PDF, TXT or read online from Scribd
Download as pdf or txt
34 views1 page

Spare Part Inventory Analysis Report: Normal Distribution-Curve EOQ Model

Uploaded by

Ranjan Shankar
The document analyzes inventory levels and reorder points for spare parts. It provides details on demand history, costs, lead times, and calculations for economic order quantity and reorder point. The analysis recommends that the reorder point be the minimum and the maximum include both reorder point and economic order quantity.

Copyright:

© All Rights Reserved
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Spare Part Inventory Analysis Report

Maximum
SoH
Level

Average
Reorder Point
Cons.

StLoc.

0611

55

11

10

10

Material #

000014085

Material Description

CARTRIDGE,NITROGEN,LT10R,ANSUL

Unit Price

CAD

Plant

5 yrs
Annual
Cons.

87.50

Lead Time in Days


Planned Delivery
Lead Time

GR Processing
Lead Time

32

Latest Goods Receipt


Date

Latest Goods
Issue Date

4/30/2015

9/3/2015

Material Consumption for Past 5 Years or 60 Months


000014085

6
5
5
4
4
4
4
4
3
3
3
3
2
2
2
2
2 2 2
2
1 1
1
1
1 1
1
1
1
1
1
1
1
1 1
1 0 0 0
0 0 0 0
0
0 0
0 0 0 0
0
0
0 0
0
0 0 0
0 0 0
0 0 0 0
0
-12015-12 2015-09 2015-06 2015-03 2014-12 2014-09 2014-06 2014-03 2013-12 2013-09 2013-06 2013-03 2012-12 2012-09 2012-06 2012-03 2011-12 2011-09 2011-06 2011-03
-2
-3
-3
-4

Annual demand

12

Service Level

85%

Service Level 85%

Per Order cost

CAD

35.00

SL Factor

1.04

Risk of a StockOut 15%

Holding Cost /Unit/Year

CAD

21.88

Economic Order Quantity

Normal Distribution- Curve

EOQ Model

95%

EOQ
Total Holding Cost
Total Ordering Cost
Total Cost

0.9

Service Level
85%

68%

0.8

Risk of a
StockOut 15%

0.7

Cost ($)

0.6
0.5
0.4
0.3
0.2

EOQ
7

0.1
0
0.1%

0.6%

2.3%

6.7%

15.9%

30.9%

50.0%

69.1%

84.1%

93.3%

97.7%

99.4%

99.9%

Percentile

Order Quantity

Safety Stock (SS)

Demand During Lead Time

Reorder Point (RoP)

Economic Order Qty (EoQ)

IOC
EOQ = Economic order quantity
Stock On Hand
EXISTING
MIN
Co = Cost of procurement
S = Annual usage
5
10
Cm = Annual carrying costs
U = Cost of the item.
CAD
437.50 CAD
875.00
DDL = Demand during Lead Time or working stock.
S = Annual usage of the item (demand)
Movement Type
LT = Lead time in days.
Ranking
SS = Safety stock.
SD = Standard deviation of monthly demand.
Lead Time Ranking
SL = Standard deviation of Lead-time.
SL Factor = The normal distribution value which yields the desired service level factor
Unit Cost Ranking

IOC
EXISTING MAX

SKF
MIN

SKF
MAX

10

11

CAD

875.00 CAD

350.00 CAD

962.50

SKF Remarks

RE-ORDER POINT (ROP) WILL BE MIN AND


RE-ORDER POINT (ROP)+ ECONOMIC
ORDER QTY (EOQ) WILL BE MAX

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