Oracle Inventory Optimization is a comprehensive Internet-based inventory planning solution that enables you to determine when and where to hold your inventories across the supply chain to achieve the desired customer service levels. You can factor in criteria such as demand variability and supply lead time variability when you make your inventory decisions. It is a strategic planning tool that can help you address the following key business issues:. Oracle Inventory Optimization uses stochastic optimization technology that enables you to factor in the multilevel supply chain network and interdependence of demand variability and supply lead time variability when generating time-phased safety stock recommendations.
Oracle Inventory Optimization enables you to evaluate multiple inventory planning scenarios and graphically compare the results. The planning scenarios for example can include different sets of customer service levels, budget constraints, and capacity constraints. This enables collaboration between these applications. For example, the safety stock recommendations of Oracle Inventory Optimization can be automatically fed into Oracle Advanced Supply Chain Planning to drive tactical supply chain planning decisions.
Stochastic optimization is a technique for prudent decision-making under uncertainty. Stochastic optimization considers:. Factors that you are trying to maximize or minimize.
Inventory - Wikipedia
For example, you would want to maximize service level and profit and minimize cost. Factors that you have under control. For example the investment on inventory when there are no budget constraints. Oracle Inventory Optimization uses this technology to help you manage the uncertainty inherent to your business decisions. Based on your requirements and objectives, you can determine the optimal inventory stocking levels and other operational policies.
Determine the optimal inventory levels across the supply chain, which improves customer service while lowering inventory investment. Collect existing data from other source instances. Specify additional inputs for the inventory plan. The following are the data that you can specify:. If the inventory plan is not optimal, make changes to the input.
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Step 3 through 6 are repeated until the inventory plan is optimal. For information on what Oracle Inventory Optimization takes as input, see Input. For information on what Oracle Inventory Optimization provides as output, see Output. Service level is a measure of satisfying demand through inventory or by the current production schedule to satisfy the customers' requested delivery dates and quantities.
The decision on service level may depend on factors such as your business objectives, budget constraints, and targeted profit. For example, profits may rise as you increase the service level. However, increased service level beyond a certain point may not increase the profits because of the relative increase in inventory costs. Therefore, if your service level is driven by profit, you need to determine the most profitable scenario with an acceptable service level. The service level may also influence your safety stock level and inventory location. For example, if you are targeting a high service level, you may want to reduce the transportation lead time by locating your inventory close to your customers.
As safety stock can provide a buffer against uncertainty, you may want to consider the variability in demand and supply when you calculate the safety stock level.
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In many cases, the degree of variability in supply and demand changes over time. You need to consider all possible scenarios when you calculate safety stock. The decision on where to locate your inventory can be a trade-off between several factors such as supplier lead times, transportation lead time, manufacturing lead time, and the flexibility of your manufacturing system.
For example, when you store safety stock in the form of finished goods, the manufacturing lead time for those finished goods decreases. However, the components and materials used in making those finished goods are committed and you cannot use them to meet unexpected customer requirements.
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Therefore, if your safety stock is in the form of raw materials, then you may want to locate your inventory close to your manufacturing plant. If the customer service level is specified at a deeper level of granularity, the service level value will apply to all independent demands for that customer. Capacity constraints can be in the form of supplier capacity, transportation capacity, and resource availability or line rates.
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In this regard, this paper consists of the joint relationship between price sensitive demands with Weibull allocation decline. This study is annoyed by Soni International Journal of Production Economics, , considering Weibull distribution deterioration with two parameter under trade credits.
Mathematical model is established for finding optimal cycle time and total turnover considering three cases for each situation depending on the position of time after which item starts to deteriorate and credit period. The objective of this investigation is to find the optimal total profit over cycle time.
Further, we use numerical examples and sensitive analysis to illustrate the results and conclude the paper with suggestion for possible future research. Mathematica 7.
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