To determine the optimal reorder point for spare parts, I have analyzed usage data from the past three years. The calculation formula, outlined in the "equation" sheet of the attached Excel file, takes into consideration the average and standard deviation of monthly usage, lead time, and service level (represented by the Z value). Two examples of calculated results along with raw data for "MECH SEAL A" and "MECH SEAL B" are provided. I am uncertain about the effectiveness of this reorder point calculation model, particularly when analyzing the usage data for MECH SEAL B. The high standard deviation in comparison to average usage and the non-normal distribution of the data raise concerns. If this model proves to be inadequate, I am open to exploring alternative approaches. For further details, please refer to the attached file "ROP_CALCULATION.xls."
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Dear Khun Panuphan, I am truly grateful for your generosity. Thank you so much.
Hey there, I'd like to share more information with you regarding stock control methods. These methods include: 1. Reorder Point (ROP) and Economic Order Quantity (EOQ) 2. Setting High and Low limits 3. Min-Max approach 4. Periodic Review and Replenishment Cycle 5. Order Up-to method 6. Order as Required approach. If you need more details on how to effectively manage your stock levels, feel free to reach out.
If the demand numbers for parts destined only to CM follow a Poisson distribution rather than a Normal distribution, the mean and variance would be approximately equal. You can find the answer in the attached spreadsheet I have returned to you. Although the variance is slightly higher than the mean, I still recommend using it. With more data, a trend towards equality may emerge. For calculating the ROP, please refer to the spreadsheet in my upcoming message. Why is there a restriction on the number of files that can be attached at once? I hope this information is beneficial to you. Rui Attachment: ROP_CALCULATION(1).xls (146 KB, 1 version)
Check out the attached Excel tool that enables quick calculation of the Rate of Production (ROP) for parts with random demand, typically utilized for corrective maintenance purposes. Regards, Rui. Download the file: Poisson_demand.xls (37 KB, Version 1)
First off, kudos for your thorough analysis and willingness to reassess your model's effectiveness. You're right to be cautious about large standard deviations, especially when dealing with spare parts inventory - variability can indeed lead to inaccurate reorder points. A few thoughts come to mind; firstly, while your model relies on a pretty standard statistical approach, it might not account well for unique situations, like sudden demand surges or supply issues. Maybe think about a more dynamic system that can adapt to real-time data? Also, consider the effect of external factors such as changes in technology standards or the introduction of replacement parts. Lastly, you might want to explore demand forecasting techniques. These can help you define a more suitable safety stock level and compensate for deviations in demand.
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Answer: - The calculation formula considers the average and standard deviation of monthly usage, lead time, and service level (represented by the Z value).
Answer: - The optimal reorder point can be calculated by following the formula outlined in the "equation" sheet of the attached Excel file provided in the discussion.
Answer: - Two examples of calculated results, along with raw data for MECH SEAL A and MECH SEAL B, are provided in the discussion thread for reference.
Answer: - Concerns may arise due to high standard deviation in comparison to average usage and non-normal distribution of the data, which may impact the effectiveness of the reorder point calculation model.
Answer: - If the current model is found to be inadequate, it is advisable to explore alternative approaches for determining the optimal reorder point based on the usage data analysis provided.
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