abc analysis and eoq
Download as PPTX, PDF24 likes10,206 views
The document examines the Pareto principle, highlighting that a small percentage of causes often leads to a large portion of effects, commonly illustrated by the 80/20 rule. It also discusses inventory management techniques, including methods for classifying inventory items (A, B, C classes) and the Economic Order Quantity (EOQ) model aimed at minimizing inventory costs. Overall, the document emphasizes the importance of focusing on critical factors to improve efficiency in various contexts.
abc analysis and eoq
- 1. Presented by A.Pawan kumar PGDM 2014-2016 Rollno-15 Presented To
- 2. Vilfredo Pareto Born 15 July 1848 Paris, France Nationality Italian Field Microeconomics Socioeconomics Contributions Pareto index Pareto chart Pareto's law Pareto efficiency Pareto distribution Pareto principle Signature
- 3. Pareto Principle “The Vital Few and Trivial Many Rule” “80:20 Rule” 1950
- 4. The Pareto Principle • A small number of causes is responsible for a large percentage of the effect -usually a 20-percent to 80-percent ratio. • This basic principle translates well into quality problems - most quality problems result from a small number of causes.
- 6. (1) 80% of crimes are committed by 20% of criminals.
- 7. (2) 80% of the time we were 20% of clothes.
- 8. (3) 80% of the pleasure that we get from relationships Comes from 20% of people.
- 9. 80% of Complaints comes from by 20% of customers
- 12. The 80/20 Principle (or Pareto Principle) according to Richard Koch (Less is More) Born 28 July 1950 London, Britain Education M.B.A. University of Pennsylvania, Wadham College, Oxford University (M.A.) Occupation Author, speaker and investor Employer Self Notable work The 80/20 Principle Richard Koch:
- 15. INVENTORY CONTROL TECHNIQUES : OPERATIONAL ASPECT OF THE INVENTORY MGT REALISE THE OBJECTIVE OF INVENTORY MGT &CONTROL.
- 16. ALL DEPENDS ON THE CONVIENIENCE OF THE FIRM TO ADOPT ANY OF THE TECHNIQUES
- 17. Most commonly used techniques……… Two bin system SDE (Sarce ,difference and easy) FSN(fast,sl owand non moving) EOQ(econ omic,orde r quantity) Max minimum system) VED(vital, essential and desirable) ABC(alwa ys better control) HML (high medium and low)
- 21. Copyright 2006 John Wiley & Sons, Inc. 12-21 Classification of inventory items • Class A 5 – 15 % of units 70 – 80 % of value • Class B 30 % of units 15 % of value • Class C 50 – 60 % of units 5 – 10 % of value
- 22. ITEM ITEMS(%) MONEY VALUE(%) A 10 70 B 20 20 C 70 10
- 23. “A “ Class items (High Consumption Value) “B” Class items (Moderate Consumption Value) “C” Class items (Low Consumption Value) 1.Very strict control. 1.Moderate control 1. Loose control 2. No safety stocks or very low safety stocks. 2.Low safety stocks 2.High safety stocks. 3.Maximium follow-up & expediting. 3.Periodic follow-up. 3.Follow –up & expediting in exceptional cases. 4.Rigorous value analysis. 4.Moderate value analysis. 4.Minimum Value Analysis. 5.Must be handled by senior officers. 5. Can be handled by middle management. 5. Can be fully delegated.
- 24. 6. 6. 6. 7. 7. 7. 8. 8. 8.
- 25. Economic Ordering Quantity • EOQ is the amount of inventory to be ordered at one time for purposes of minimizing annual inventory cost. Formula for Economic Ordering Quantity : – Ordering Cost: Cost of placing single order. – Holding Cost: Cost to hold one unit inventory for a year 2Dco/Pci
- 26. USE OF EOQ AS A PART OF A CONTINUOUS REVIEW OF INVENTORY SYSTEM MODEL FOR CALCULATING THE APPROPRIATE REORDER POINT AND THE OPTIMAL REORDER QUANTITY TOOL FOR DETERMINING QUANTITY OF INVENTORY
- 27. EOQ MODEL
- 28. Conclusion : Economic order quantity method is an highly efficient method so as to overcome In management of inventory difficulties.
- 30. Conclusion Efforts is important, but knowing where to make an effort makes all the difference!
- 31. Thank u