QUANTITATIVE ANALYSIS

Quantitative Analysis: Decision Making



Quantitative Analysis: Decision Making

Inventory Planning

The Inventory module allows stabilizing the supply and allocation of material finished product, product in process and material purchases at the lowest cost and risk. This interactive tool resolves mixtures optimal inventory in time based on the available capacity and the demand mixture. Preactor optimizes inventory and setup costs in the short term, solving resource allocation in a stable and consistent with the volatility of demand. It also allows long-term analysis to assess the economic impact of product changes, new sources of production or new service policies. The Inventory module allows us to distinguish the priority and value of the inventory mix to increase the flexibility and predictability of production resources. Through its ABC analysis tools allows us to quickly view the products that provide more value and causing further complications.

Support as an essential tool for executive sessions of salts and ops, Preactor assesses the economic impact of changing product mix and service levels, and allows us to simulate the effect of allocating production to pursue different marketing strategies.

Calculates the optimal level of inventory mix, level and frequency

Identify the risk level of inventory on the basis of ability, volatility and demand priority

Viewing inventory at any level of aggregation and different units of measure

Maps the relationship of inventory to satisfy demand

ABC Generates metrics and indicators: coverage, speed, service level, cycle times etc.

Evaluate the financial impact of meeting the demand targets with various mixtures

Allows the user to solve supply and force levels in a distribution network

Position the mix of inventory based on the margin, volatility and resource consumption

Solve demand scenarios controlled by the user to measure the impact of different strategies in sales and ops sessions.

Alert shortages of critical materials

To simulate the supply chain based on material available and projected

Calculates minimum and maximum expected service and compliance.

Provides intelligent consumption of final inventory or process inventory

Question 1

For this question we will be using excel solver. In this question we will be analyzing the market effectiveness in terms of the recovery period. The management of Dreamcatcher organization has managed to reduce their ordering cost from £280 to £190. The expectations for the future year of the economy are as follows:

Scenario

Crisis Continues

Slow Recovery

Medium Recovery

Fast Recovery

Probability

20%

15%

50%

15%

Demand

40,000

65,000

105,000

250,000

The table states the probability of the economy risks with their respective demand. The carrying cost per unit is £1.45. We will be evaluating all the demands of the scenarios separately.

Part A

Crisis Continues Scenario

Parameter

Value

Parameter

Value

Demand rate(D)

40000

Optimal order quantity (Q*)

3237.71

Setup/Ordering cost(S)

190

Maximum Inventory Level (Imax)

3237.71

Holding cost(H)

1.45

Average inventory

1618.85

Unit cost

0

Orders per period(year)

12.35

Annual Setup cost

2347.34



Annual Holding cost

2347.34



Unit costs (PD)

0



Total Cost

4694.68

The table above states if the demand is 40,000 units, the order cost is £190 and Holding cost (H) £1.45 then the company should order 12.35 per year in order to reach the optimal equilibrium point where the demand meets the supply. This will save the company's extra cost on holding the inventory. If they demand 40,000 units in the year their total cost will accumulate to £ 4694.68.

Slow Recovery

Parameter

Value

Parameter

Value

Demand rate(D)

65000

Optimal order quantity ...