Inventory Capacity and Whether Insurance and Costs Essay

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Inventory Capacity and Whether Insurance and Costs of Storage Increase as Inventory Increases

At least $6,010.00, again this number may change depending on how many orders the company places per year.

Generally, $1,000 depending upon whether this number increases to meet a larger inventory capacity.

couldn't answer it…turned in early so the client would have enough time to answer it himself.

The earliest due date rule requires the job with the earliest due date to be selected. The job with the earliest due date is selected first. The user inputs the number of jobs along with their names, processing time and due dates of each job or the use the data values given at the starting point. Next one sorts out the earliest due date among the jobs. Then calculate each jobs flow time by using the processing time; the flow time is the accumulations of processing time for each job. The delays are calculated from the flow time and due date. It is important to realize that there are two conditions for calculating the delays. If the delays calculated are fewer than the flow time, then the delays are zero. If more than the flow time, then the delays are equal to the value of the flow time minus the due date.

Next, one must calculate the total processing time: total flow time and total delays from the accumulations processing time; the accumulations flow time and the accumulations delays. Next, by using the total flow time; total processing time, and total delays for calculating the average completion time, along with the utilization, the average number of jobs in the system and the average job delays. Below are the following formulas:

Average completion time = sum of total flow / no. Of jobs

Utilisation = total processing time / sum of total flow

Average no. Of jobs = total flow time / total processing time

Average job delays = total delays / no. Of jobs

Using the EDD Formula, the average lateness is the total delays/no of jobs. Here, there are five jobs none of which have delay times therefore the average job delay is zero because each delay is less than the flow time of each job.

Baker Kenneth, R., Bertrand, J.W.M. A Dynamic Priority Rule For Scheduling Against Due-Dates, John Wiley and Co, 1974

Ren, Haiving, Weng, Michael X. An efficient priority rule for scheduling job shops to minimize mean tardiness, September, 2006


To determine the standard deviation, one must also determine the average of various sets of data. In the business context, it is important in determining the mean of all the various sets of data to determine the reorder point. There are several steps, typically, you must first compute the mean, since we have the mean and it is five, we can make this determination without the difficult process of finding the mean. As the text states, inventory management is about keeping ones stock and not having more stock then necessary to avoid holding costs.

The problem is complicated by uncertainties in demand and supplier lead times. Essentially, inventory is a reserve system to prevent a stock out. However, as important as it is to prevent such a stock out, Dunnstreet also does not want to hold onto more than it can sell thus increasing holding costs or if a supplier is late in delivery. Therefore it is critical that DunnStreet determine the safety stock level for its inventory. According to the facts, the supplier standard of deviation of lead time is 0 because the supplier is never late, thereby making this equation much simpler to solve.

(Avg. Lead Time * Standard Deviation of Demand ^2 + Avg. Demand ^2 * Standard Deviation of Lead Time ^2) = the safety stock level therefore is 250.

Chase, Richard B, Jacobs, Robert F. Operations and Supply Chain Management Textbook: Operations and Supply Chain Management; 13th edition

Dodge, Yadolah (2003). The Oxford Dictionary of Statistical Terms. Oxford University Press.

Ghahramani, Saeed (2000). Fundamentals of Probability (2nd Edition). Prentice Hall: New Jersey. p. 438.


MPS stands for master production schedule and it covers all the aspects of production, inventory, staffing amongst other things. It is essentially every critical aspect of production. It is a plan for determining demand by measuring critical manufacturing processes, procedures and resources in optimizing production. Ultimately, MPS is about identifying bottlenecks. Bottlenecks occur when processes are stagnated by a limited number of resources or components in the making of a process. The more limited the capacity of the bottleneck, the more limited the capacity of the manufacturing process as a whole. To anticipate needs while manufacturing goods an MPS must steer the manufacturing activity to ensure accuracy and viability in order to maximize profitability. MPS schedules, by and large are driven by technology. Integration is a key tem in the process in which data and processes from many areas throughout the organization unify for easy access and work flow. An effective manufacturing process software generally accomplishes integration by creating one single database that uses multiple software modules providing different areas of the organization with various business functions.

Schedules typically do not encompass every aspect of production, focusing primarily on key elements capable of being controlled effectively, primarily in areas of demand forecasting demand, production and inventory costs, lead time, working hours, capacity, inventory levels, available storage, and parts supply. Each company has its own model based on several factors based on its respective expectations of production. It is indicative of the business plan, demand forecasts and ultimately a plan of production to help avoid shortages, reduce costs and allocate resources effectively.

JE Beasley. "Master production schedule." Retrieved 2009-04-11.

Chase, Richard B, Jacobs, Robert F. Operations and Supply Chain Management Textbook: Operations and Supply Chain Management; 13th edition


The purpose for a product breakdown structure is to analyze a document and demonstrate the outcomes of a product, especially during the planning stages of product management. It is a hierarchical structure that resembles a tree of deliverables that provides, in this case a time element to determine when a product is assembled. It is essentially a diagram that represents the outputs that make up the product. Unlike the Work Breakdown Structure (WBS), it only includes the physical architecture of the product, disregarding data and service elements necessary to complete, forecast and in many cases improve the system.

Bill of Materials (Product Tree Structure)

Chase, Richard B, Jacobs, Robert F. Operations and Supply Chain Management Textbook: Operations and Supply Chain Management; 13th edition

Monk, Ellen; Wagner, Bret (2007). Concepts in Enterprise Resource Planning. Course Technology Cengage Learning. pp. 97 -- 98.


Given the fact that a simulation model of any system can only be an approximation of the actual system it does stand to reason that running simulations are unnecessary. However, if the model is engineered close enough to the actual system then one can experiment using measures that would prove too risky under an actual system. But if the system is not close enough in approximation it will certainly lead to errors in conclusions and analysis. The results could be just as costly as if they were made under an actual system. Approximation can be done for all simulations whether there are corresponding systems present or not. Validation of such simulation models are a product of intense statistical techniques simulation models using statistical techniques that depend upon the availability of data in the real system.

It is important, however, to establish a bright line between what is real and what is not real. Credibility of any model can be demonstrated only for the use of the model and under the conditions set in the model. It does appear that validation and verification are impossible given the fact that a counter test always exists but for the purpose of testing theories, validation is essential. Certainly some models are better than others because they are more authentic, but where there is credibility, a business manager can support his theories with data. Establishing a strong data base of empirical evidence will only improve the decision making process. There lies no single test, however, as the model passes more tests, the greater its credibility will be.

Chase, Richard B, Jacobs, Robert F. Operations and Supply Chain Management Textbook: Operations and Supply Chain Management; 13th edition

Sargent, R.G, Validation and verification of simulation models, Simulation Conference, 2004. Proceedings of the 2004 Winter

Troitzsch, Klaus G., Validating Simulation Models, Universit at Koblenz -- Landau


An effective forecasting model analyzes past data is based on past data often based on behavioral patterns that locate causes of behavior. When developing a reasonable and realistic forecast for business revenues, a useful tool is a detailed revenue modeling / demand analysis which studies a company's products and services and examines its usage potential and the customer's propensity to pay. A demand analysis demonstrates current demand while using assumptions for demand build up. This is critical when predicting…

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