Business
Data & Analytics
Inventory Control
Inventory Optimization
4.7 (8 ratings)
Course Ratings are calculated from individual students’ ratings and a variety of other signals, like age of rating and reliability, to ensure that they reflect course quality fairly and accurately.
228 students enrolled

Inventory Optimization

Quantitative Approach towards Inventory Management
4.7 (8 ratings)
Course Ratings are calculated from individual students’ ratings and a variety of other signals, like age of rating and reliability, to ensure that they reflect course quality fairly and accurately.
228 students enrolled
Created by Girijesh Pathak
Published 11/2011
English
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Inventory Optimization
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This course includes
  • 1 hour on-demand video
  • 8 articles
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
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What you'll learn
  • Deciding about economic order quantity that minimizes the overall cost.
  • Deciding about safety stock to handle uncertainties.
  • Deciding about economic lot size in batch production system.
  • Optimization under some special situations related to inventory control.
  • Deciding under mutually conflicting objectives.
  • Street smart approach in decision making.
Requirements
  • None. Basic understanding of differential calculus can be advantageous
Description

In quantitative inventory management, values and behavior of various variables like demand, costs etc. are estimated based on data and mathematical modelling techniques. There is always some doubt in the mind of managers about the accuracy of estimated values. This course provides intuitive solution to these aspects by deriving some thumb rules to understand whether a decision moves the system towards optimal or away from it.

This course discusses about costs in inventory management, optimization of costs, does some post optimal analysis and derives some street smart approach to take optimization decisions without getting into much mathematical calculations.

The focus is mainly on single item deterministic model with constant demand and lead time. Then, it builds other important concepts for inventory management and improvises to deal with uncertainty in demand.

This course doesn't discuss about any logistics or materials management software tool. Tool specific learning makes one understand the features of a software tool instead of understanding the core concept of inventory management. Features of the tool keep changing from tool to tool making the acquired knowledge very specific to the tool. A student with proper understanding of concept can easily related the features of the tool with these concepts and can use them smartly. So, join and enjoy the concepts.

Who this course is for:
  • Students of Production and Operations Management.
  • People Aspiring for Jobs Needing Operations Research Knowledge.
  • Practicing Production Managers.
  • Someone Interested in Optimization Techniques.
  • Finance Students
Course content
Expand all 14 lectures 01:14:00
+ – Inventory Control -- Basics and Costs
6 lectures 27:28
Keeping inventory means keeping stock of items for future use. In a typical production organization various items (raw materials) are purchased from outside, some processing is done on them internally (Work-in-progress) in one or more stages and then the finished products are finally made ready for…
Inventory control -- Basic
01:38
As you know that inventory can get build-up at any of the stages like raw material, work-in-progress or finished product. If you try to list down the reasons of inventory build-up the list may look something like this: -- Supplier supplying the item before time, so before the existing stock gets exh…
Reasons for Inventory Build-up
01:23
Types of Costs Involved in Inventory Control
Preview 10:14
Inventory Carrying Cost and Ordering Cost
Preview 08:38
While doing various activities in inventory control one has to take various decisions. Since we are mainly concerned about the quantity and value of the inventory, the kind of decisions involved are mainly. -- How much to order? -- When to order? -- Whom to order? Whom to order is a part of vendor d…
Decisions and Costs Involved in Inventory Control
02:37
To understand it better, let us visualize deterministic and probabilistic situations. A deterministic situation is one in which the system parameters can be determined exactly. This is also called a situation of certainty because it is understood that whatever are determined, things are certain to h…
Deterministic and Probabilistic Models
02:56
+ – Optimization of Cost
3 lectures 15:48
Economic Order Quantity
Preview 10:53
Here we derive a formula for Economic Order Quantity (EOQ) for single item deterministic and constant demand and lead time. As the name indicates EOQ is a quantity that we order in every order and it is economical too, to the extent that it minimizes the total cost. As discussed earlier, we will con…
The EOQ formula
04:10
1: An organization has to do a machine operation in which the machine setting time is 6 hours. The cost of machine setter is $ 8 per hour. What should be the economic lot size for production if the rate of inventory carrying cost is 15% and this operation is required to be done on 10000 pieces in a…
Some Numericals for practice
00:45
+ – Post Optimization
2 lectures 03:51
If we compute the ordering cost and inventory carrying cost for EOQ, we get Ordering cost = AD/Q = AD/ Sqrt (2AD/vr) = Sqrt (ADvr/2) Inventory carrying cost = Qvr/2 = (Sqrt (2AD/vr)) * vr/2 = Sqrt (ADvr/2) Thus, if we order for EOQ in every order then the total ordering cost and the total inventory…
Some analysis on EOQ formula
00:40
Revise the EOQ (Economic Order Quantity) formula discussed in this course — EOQ = Sqrt (2AD/ VR) where Sqrt means square root of, A = Ordering cost/ order, D = total demand or consumption or requirement, V = unit cost of the item and R = rate of inventory carrying cost. This is a deterministic model…
Inventory Control- Insensitivity of Total Cost near Optimum
03:11