Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

12.1 Demand and Available Inventory along the Time Axis

Intended learning outcomes: Explain the projected available inventory and its calculation. Describe scheduling and cumulative projected available inventory calculation. Produce an overview on operating curves for stock on hand.



Both long-term management of resources, as outlined in Section 5.2.2, and stochastic materials management allow the demand for an item to be regarded as a scalar variable, that is, as a total, because the exact time at which the demand arises is either not relevant or was not the object of the estimate. What is estimated is the requirement quantity over a given time period. Thus, the shorter the selected period, the greater the scatter. At this level of inaccuracy, it is more sensible to assume that demand is uniformly distributed across the entire period.

However, when the exact point in time at which demand will occur within the customer tolerance time is known, it makes sense to utilize this information. Instead of relying on the order point technique (see Section 11.3), which only takes stock levels into account, you can now also consider future demand and deliveries.

Time phasing is a technique that divides the future time axis into time periods and considers stock levels for any desired point in the future ([APIC16]).
Time bucket is the chosen period for time phasing. It contains all relevant planning data summarized into a columnar display (for example, a weekly or monthly time bucket). 
Time-phased order point (TPOP) is a concept that was used in the early version of the MRP (material requirements planning) technique as described in Section 12.3.2. 

Considering time periods makes the technique easier to teach and learn. Also, calculation of the technique by hand is such a time-consuming procedure that it makes sense to produce a rough calculation according to time periods. This also held in the early days of ERP software, when access to the data media was very slow. Today, however, software packages produce calculations that are accurate at the event level.

The projected available inventory calculation described below forms the basis for deterministic materials management.



Course section 12.1: Subsections and their intended learning outcomes



Course 12: Sections and their intended learning outcomes

  • Course 12 – Deterministic Materials Management

    Intended learning outcomes: Produce an overview on demand and available inventory along the time axis. Describe deterministic determination of independent demand. Explain in detail the deterministic determination of dependent demand (Material Requirements Planning, MRP). Differentiate various lot sizing techniques. Disclose how to analyze the results of the MRP.

  • 12.1 Demand and Available Inventory along the Time Axis

    Intended learning outcomes: Explain the projected available inventory and its calculation. Describe scheduling and cumulative projected available inventory calculation. Produce an overview on operating curves for stock on hand.

  • 12.2 Deterministic Determination of Independent Demand

    Intended learning outcomes: Present the customer order and distribution requirements planning (DRP). Disclose the consumption of the forecast by actual demand.