The 3 Pig's Pooling (Story Warping) by Seong Am Moon, Dong Jin Kim, Aaron Rae Stephens
you reduced the number of handles that needed to be kept in inventory because of uncertainty. Your response times became faster and there were overall benefits as well.
The method of sharing risk to create profit is broadly applied in management. AltıRisk pooling is a process of integrating risk from multiple sources to effectively eliminate some of the total risk. There are four kinds of risk pooling used in management today: product pooling, location pooling, lead time pooling, and capacity pooling. Risk pooling is a supply chain strategy that integrates various aspects of the supply chain to eliminate or mitigate uncertainty.
▶ Product Pooling : Product Pooling is the unification of various product parts and pieces to simplify inventory needs.
▶ Location Pooling: Location Pooling is the combining of locations to reduce inventory uncertainty.
▶ Lead-Time Pooling: Lead time Pooling is the integration of distribution networks.
▶ Capacity Pooling: Capacity pooling is utilization of a flexible production method to reduce uncertainty.
Product pooling is a strategy of employing similar product components to reduce inventory uncertainty
Location pooling is the idea of sharing inventory over a large area to reduce costs and risks.
All inventories are kept at one location for the whole region to reduce the risk of exhausting their inventories.
The more similar the demand is for a given product the smaller the reduction of risk is.
Lead-time pooling is the combination of location pooling and project pooling.
This is used when we have variable demand for items that require many days to be delivered on time.Knowing the customer service level is 95% and the z value is 1.64 we could calculate the safety inventory level to be at 656 units for each branch.
Lead-time pooling is only effective for a large number of branches not for just a couple shops.
Capacity pooling is a strategy employed to enhance the flexibility of a production facility by sharing capabilities. The ability to use people, machines, and materials is called capacity.
We now have an extensive understanding of how pooling is used to cut costs by reducing risks.
Risk pooling is a strategy that redesigns the supply chain and production processes to reduce uncertainty.
It can be applied specifically in product pooling, location pooling, lead-time pooling, and capacity pooling.
Product pooling reduces inventory through product innovation.
Location pooling consolidates inventory facilities and distribution centers.
Lead-time pooling uses distribution integration to reduce necessary inventory by placing a distribution center midprocess making it possible to deliver a product directly from factory to retailer.
Finally capacity pooling is a strategy that allows production units to share capabilities so they can flexibly share production runs.
Ultimately risk pooling is a strategy that decreases the inventory at an equivalent service level or increases the service quality at an equivalent inventory level.
The Emperor's S-Curve (Story Warping) by Seong Am Moon, Dong Jin Kim, Aaron Rae Stephens
Exponential growth may occur over a certain period of time, but it would not last indefinitely.
Once the values in the system reach a steady number, exponential growth effectively terminates.
In a positive feedback loop, a negative ripple effect means a reduction.
Contrasting with exponential growth, the negative effect shows a drastic decline in the beginning with a dissipating decrease at the end.
Nevertheless, this remains a positive feedback loop.
A downward convex curve means that changes are rapid at first but gradually decrease over time.
As the value approaches the ‘target population’ change will become steady.
Thus a negative loop is used when we want to control or manage outcomes, such as quality control.
Exponential growth is the cause of this reversal.
We can see many circumstances where both a positive loop and a negative loop exist. This is called an S-Curve.Formun AltıIt can be exemplified by a company launching a new product in the marketplace. In the beginning products are sold xviii by word of mouth (positive loop); later, because of the limited size of the market, a negative loop is revealed. Thus, we have the S-shape.
Making the Match Girl Rich (Story Warping) by Seong Am Moon, Dong Jin Kim, Aaron Rae Stephens
This all means we better try to avoid a shortage or a surplus but depending on how heavy the cost of each.
Historical data does not limit your potential demand nor does it absolutely determine your future demand.
Our job is to determine the purchasing quantity that will maximize profits.
The Single-Period Inventory System: one-time purchase, a single period for the inventory.
Multiple-Period Inventory System : primarily designed to maintain an inventory of items (that are not time sensitive) so the business does not loose sales because there is no inventory.
When Rose and Tom looked carefully at the purchase price and the selling price they could see there was a marginal benefit to buying more than the average demand quantity.
They bought a newspaper at 2 Shillings but they sold it at 5 Shillings.
The marginal profit was 3 Shillings when a newspaper was sold.
Comparing a 2 Shilling loss for an unsold (surplus) newspaper to a 3 Shilling profit for a sold newspaper we can see that at the margins there is a benefit to having more than the average.
By looking at the margins we are able to find a difference and use that! But we are not done.
a uniform distribution of the probability, But frequently we have different distributions of probability including normal distribution, Poisson’s distribution, gamma distribution, beta distribution and others.
The distribution of the probability for each possible outcome is important for finding our purchase quantity.
The overage cost is the cost of purchasing too much and not selling them.
The underage cost is the cost of buying too few and loosing sales.
There is a simple equation that is used to determine what we call the ‘critical ratio’:
Here U is the underage cost and O is the overage cost.
A critical ratio of 0.6 will show a purchasing quantity at 110 newspapers.
We can use this equation to determine the purchasing quantity of any operation given the parameters for a uniform distribution of demand quantities and the marginal profit and loss.
Fashion Industry : Most fashion products have a limited time they can be called fashionable; therefore, a limited time when they can be sold at the maximum retail price. Fashion items do not become worthless but the value does drop significantly when they are no longer in fashion, so a single-period inventory system is employed.
Different distributions will complicate the calculation method.
Nevertheless, from what we now know a critical ratio of 0 means we should have the very lowest possible inventory; a critical ratio of 0.5 equals the average demand; finally a value of 1 means we should have the largest possible inventory given our parameters.
We now have the ability to find the profit maximizing purchase quantity for a single-period inventory system.
Each doll was very similar to him. They could walk and talk but they were not as smart as him.
he felt he was not working fast enough.
I need a ‘Batch Production Process’ so that I can create these dolls more quickly.
Pinocchio planned to make a doll and then train it to help him.
because we are all donkeys we cannot do too much. It is true we can only use our mouths so we have designed very simple tasks for each other.
Then we become experts in each simple task. By doing these simple tasks very quickly all at once we are able to produce 1 new toy every minute.
We call it ‘Continuous Manufacturing’;
lets call them 1, 2 & 3. If it takes 50 seconds for the first, 60 seconds for the second step and 40 seconds for the third step then it will require 150 seconds for the entire process.
The first production cycle is represented by 1 on the y axis; the second, third and fourth follow.
With the first cycle it takes 150 seconds. For each consecutive cycle a product is produced in 60 seconds.
Workers continuously produce their parts so there is no wasted time.
The one that takes the longest to complete sets the pace.
By balancing the work evenly we can reduce the total production time. This is called ‘Line Balancing’.
Equilibrium is where all processes take the same amount of time to complete so we have no bottlenecks.
It is not easy to attain full equilibrium because bottlenecks may occur from a number of reasons including anything from worker negligence to faulty materials. it’s a tragedy that such a valuable concept is unused by so many.
Only the first bag is not restrained by the bottleneck but subsequent bags are restrained by the bottleneck.
The process time before the bottleneck is the longest process time in our production process.
Nowadays companies operate in an environment full of constraints.
We are surrounded by them internally and externally.
The theory of constraints is employed as a strategy to maximize profits by managing and reducing these constraints in the short-run as well as the in the long-run.