Finding optimal reorder points for a bakery factory via simulations
Date Issued
2011
Date
2011
Author(s)
Koo, Carlos
Abstract
The material procurement cost is essential that affects the production cost in the bakery industry. In material procurement process, the reorder point of materials determines the procurement cost. Hence, finding an optimal reorder point of a bakery factory is the key to reach the minimum material procurement cost. However, some of the factors such as market demand variations, material purchase quantity scale, or production scale, may change the optimal reorder point. Many methods have been developed and applied to many different industries, but those methods are not suitable for a bakery industry.
This study intends to find an optimal reorder point for a bakery factory via simulations. A bakery simulation model with eM-plant software is built to study the material procurement process. The procurement cost in this study is composed of five costs: transportation cost, labor cost, stock out cost, material stale cost, and large amount discount. Three factors are used to generate the simulations input, which are: market demand variations, material purchase quantity scale, and production quantity scale. Simulations for the material procurement process of a bakery factory are performed with different levels of factors to approach the near optimal reorder point.
The simulation results reveal: 1.The level of an optimal reorder point will be increased when the degree of the market demand variation is increased. 2. The material procurement cost can be reduced with an optimal reorder points accompanied by a suitable level of a material purchase order quantity, and 3. It can reach the minimum procurement cost if the production scale is enlarged.
Subjects
reorder point
sensitivity analysis
simulation
material procurement
Type
thesis
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