Archive

Archive for March, 2010

How to use least squares regression in forecasting

During Service and Sales subject we were working on forecasting. One of the techniques used was least squares regression. I have prepared a video explaining how to use  excel spreadsheet and how to interpret all different parameters.

Download from here the excel spreadsheet

Categories: Inventory control Tags:

Excel functions translations

March 20, 2010 4 comments

You can find below a useful translation of every Excel function from Spanish to German:

Spanish German
ABRIR.ARCHIVO DATEI.ÖFFNEN
ABRIRA DÖFFNEN
ABS ABS
ACOS ARCCOS
ACOSH ARCCOSHYP
AGREGAR.BARRA MENÜLEISTE.EINFÜGEN
AGREGAR.BARRA.HERRAMIENTAS SYMBOLLEISTE.EINFÜGEN
AGREGAR.COMANDO BEFEHL.EINFÜGEN
AGREGAR.MENU MENÜ.EINFÜGEN
AGRUPAR GRUPPIEREN
AHORA JETZT
ALEATORIO ZUFALLSZAHL
AÑO JAHR
APL.TITULO ANW.TITEL
ARCHIVOS DATEIEN
AREAS BEREICHE
ARGUMENTO ARGUMENT
ASC ASC
ASENO ARCSIN
ASENOH ARCSINHYP
ATAN ARCTAN
ATAN2 ARCTAN2
ATANH ARCTANHYP
AYUDA HILFE
BDCONTAR DBANZAHL
BDCONTARA DBANZAHL2
BDDESVEST DBSTDABW
BDDESVESTP DBSTDABWN
BDEXTRAER DBAUSZUG
BDMAX DBMAX
BDMIN DBMIN
BDPRODUCTO DBPRODUKT
BDPROMEDIO DBMITTELWERT
BDSUMA DBSUMME
BDVAR DBVARIANZ
BDVARP DBVARIANZEN
BINOM.CRIT KRITBINOM
BUSCAR VERWEIS Read more…
Categories: Uncategorized

Multistage inventory control

Inventory control should full fill the following objectives:

  • To determine the optimal inventory policy for the whole system.
  • To keep the cumulative production line close to cumulative demand line.

Multistage inventory is also known as Multi-Echelon system, where we have different layers of inventory:

Managing inventories also implies to accept a level of uncertainty at different stages of the planning process. According to Galbraith uncertainty is
the difference between the amount of information required to perform a task and the amount of information already possessed.

There are different algorithms to manage multistage inventories:

  • Kacprzyk and Staniewski (1982):
    • Infinite planning horizon.
    • Fuzzy system, with fuzzy inventory levels, inputs and outputs.
    • Algorithm that determines an optimal strategy to determine the reinstatement of existent inventory levels.
  • Park (1987):
    • Economic Order Quantity (EOQ) model from a fuzzy set theory perspective.
    • The order and inventory costs are modelled by trapezoidal fuzzy numbers.
    • Rules to transform the fuzzy cost information in precise inputs for the EOQ model.
  • Hojati (2004):
    • Probabilistic-parameter EOQ model
    • Fuzzy parameter EOQ model
    • Simulation to compare the results.
  • Porter et al. (1995):
    • Genetic algorithm to solve an inventory-production-distribution problem.
    • The objective is to determine optimal stock levels, production quantities, and transportation quantities to minimize total system costs.
  • Samanta and Al-Araimi (2001):
    • Based on fuzzy logic for inventory control.
    • Periodic revision of the inventory with a variable order quantity.
    • Combines fuzzy logic with a proportional-integralderivative (PID) control algorithm.
    • Product inventory at the desired level.
    • Demand variations and the dynamics of the production system.

One of the main conclusions is that there is an intrinsic relation between inventory contrl/management and the production system. Different production systems require different inventory systems.

Definitions:

  • Inventory inaccuracy: The discrepancy between the actual and the estimate inventory

Keywords:

  • Control: Centralized or Decentralized
  • Lot size
  • Reorder point logic
  • Safety stock: Large or small
  • Demand pattern
  • Ordering pattern
  • Inventory cycles

Inventory planning hierarchy


 

Sources:

Categories: Inventory control

Basic inventory principles

March 12, 2010 1 comment

First it’s important to remarck that inventory control is an inexact science. This will give us an introduction to  basic inventory principles:

Importance of inventory costs.

What are the typical costs involved? (inventory cost drivers):

  • Facility costs
  • Human capital: The cost of labor to maintain storage
  • Finance costs.
  • Management costs.
  • Procurement costs: costs of purchasing.
  • Inventory turnover.
  • Sock accuracy
  • Service levels: critical goods, non critical goods, scheduled delivery

Read more…

Categories: Inventory control Tags: , ,

Price, Value and Cost

By reading Philip Kotler Principles of Marketing, we can extract 3 definitions that can help on this topic:

Price:

The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Click on the image to enlarge

Cost:

Costs set the floor for the price that the company can charge for its product. The company wants to charge a price that both covers all its costs for producing, distributing and selling the product, and delivers a fair rate of return for its effort and risk. There are different classifications of costs. The more general one is the one that defines fiexed costs and variable costs. Fixe costs do not vary with production or sales level while variable costs vary directly with the levelo of production.

Value:

Buyers’ perceptions of a product value.

Defining prices:

Usually a combination of the 3 previous concepts is used to determine the price of a product. This concept should consider:

  • Product costs.
  • Competitors’ price and other external and internal factors.
  • Consumer perceptions of value.

According to that we can define 2 main pricing strategies:

  • Cost based pricing: Product driven process. The company designs what it considers to be a good product, totals de costs of making the product and sets a price that covers cots plus a target profit.
  • Value-based pricing: Customer driven process. The company sets its target price based on customer perceptions of the product value. The targeted value and price then drive decisions about product design and what costs can be incurred. As a result pricing begins with analysing consumer needs and value perceptions and a price is set to match consumers’ perceived value

Soutvr: Philip Kotler – Principles of Marketing, 3rd European Edition. p. 587

On the next video, we can see an interesting lecture from Philip Kotler at the London Business Forum where he states that:

Our job is to create, communicate and deliver value to a target market at a profit.


Categories: Uncategorized Tags: