Operational Research Essay

Stock realise or Inventory overlookler has been in hold for a long time. While sm totally organizations whitethorn use manual orders to track their stock, complex global organizations make use of sophisticated systems give care ERPs to handle inventory control. There ar various stock control methods in use. The methods used by a business organization depend upon not only the size and complexness but the type of industry it is in. A DIY superstore may use a method analogous the rescript Point where the film is driven by the customers buying rules with little or no control by the manufacturer.As against this, a stock control method comparable MRP is used in companies like the Executive Upholstery Company where enquire is dependant upon sales forecast and the sales orders. In the following paragraphs the stock control methods used by Executive Upholstery Company and DIY superstore are examined and also compared with individually other to provide insights into the two meth ods discussed. Order Point Method DIY superstoreSupermarkets, warehouses and regular close to manufacturing companies tend to use Order Timing Decisions or Order Point methods for inventory control where the demand is not certain. The demand pattern in a DIY superstore is seasonal and is dictated by the consumers. The demand is self-supporting of the manufacturing processes and many variations in demand need to be considered while controlling the inventory. Traditionally stock control was done using guess bring to discover the stock levels and re order points. Factors like Safety Stock, EOQ, an lure Times were not considered.Because of the huge numbers of items involved, and also the need to neck up with variable and uncertain demand patterns, manual methods gave way to some techniques like alphabet/ VED analysis Forecast Order Point. In ABC analysis, for instance, the inventory is categorized by the importance of the contribution to the final harvest-homeion cost. Some classification can be the most significant, important and less important. In the Forecast Order Point method of stock control, the future demand is calculated using the historical demand patterns.Time series methods like simple average, weighted average and exponential smoothing methods can also be used to forecast demand to a greater extent accurately. In the DIY superstore employment, the simple average method was used to forecast demand and lead time. Based on the 5 weeks of Master Production inscription, re order point for various items for the week6 were determined. Table 2 below shows the grade point for the various items found on the 5 weeks of maser Production Schedule.The intrinsic problem with this technique is that it assumes that the forecast is near accurate and there is synthetic rubber stock. In a weighted average method of forecasting technique, weight unit to the most recent demand is given more and less to the introductory weeks. Techniques like Exponent ial smoothing are used to forecast the demand more accurately when there are trends in data and data is usable for a longer period of time. Considerations like Safety stock and helper Level need to accounted for while using any forecasting technique.MRP in Executive Upholstery Company MRP is used when the demand is more certain and is based on sales forecasts, sales orders. It uses a time phased production schedule dictated by the capacity available. MRP uses, apart from this top level demand, inputs like Bill of Material, Stock on hand, Purchase orders already placed. Bill of materials lists all the split and components required to make finished products and subassemblies. A structure plot for BOM can be made using various levels with the finished product being at level 1.Manufacturing organizations do use stock files and give out order files. Stock files list current stock of all parts finished, raw material and sub assemblies. Work order files list replacing orders which ha ve been already placed. The main consideration of MRP is to produce a square off of time phased requirements (orders) for each component in the system at under cod intervals of time days or weeks. The first step in MRP is to identify the Gross Requirements for each component or assembly how many in each time period.The Gross Requirements for each part in the archetype at table 1 is arrived at by identifying the demand total of each of the three types of chairs (Captain, Recliner and Director) from the Master Production Schedule and multiplying this amount of money by the quantity in each part in its billet including the parts of sub assemblies and then adding them up all to arrive at the total demand for each part. While conniving the Gross Requirements, the terminal level components are used. Also, the beginning inventory(stock on hand) as well as the purchase orders pending were taken into consideration while calculating the net income Requirement for each part.Another concept used in the example in Table1 is the Planned Order Releases which are scheduled orders by winning into consideration lead time, lot sizes. Summary MRP solves more complex issues like which part to order and when for a production process which are not easily amenable in a stock control method like Order Point. Order Point calculations do not take into consideration lot sizes, safety stock, and the more methodical approach of calculating Gross Requirements and net Requirements of each part involved in a finished product.