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Shortage costs

Shortage costs These are costs associated with loss of demand or penalties associated with delays. [Pg.2021]

The research we report on was performed at a large petrochemical company. When determining stock quantities, determining shortage costs was troublesome. The company carries out reliability centered maintenance studies in order to improve maintenance practice at their plants. Rehability centered maintenance is a structured approach to ensure that all available data and knowledge is used to arrive at an optimal maintenance regime. [Pg.572]

The RCM study enables the use of downtime costs that are based on a thorough analysis by people that are actually working with the equipment.We however find that while in inventory models often shortage costs consisting of a single number are assumed, in practice all equipment in which the spare part is used is a potential source of downtime costs, and the downtime costs of different pieces of equipment need not be equal. Another complication that came forward is redundancy. When there are two pieces of equipment, of which only one is needed to keep the plant running, a breakdown of one does not necessarily have severe economic consequences. In summary, it is not clear in what maimer the downtime costs translate to shortage costs for the spare parts. [Pg.572]

Dekker and Plasmeijer (1997) advocate setting quantitative estimates for unit downtime costs in complex systems in order to faciUtate decision making on maintenance and spare parts inventory levels. They provide methods to estimate these downtime costs. We take a different perspective. We will not estimate the downtime costs of individual pieces of equipment hut instead directly estimate the shortage costs of spares in the combined system. [Pg.573]

There have been a few studies investigating the newsvendor model with the objective of attaining a preset target profit. Kabak and Schiff (1978) first study the problem with zero shortage cost. Lau (1980) and Sankarasubramanian and Kumaraswamy (1983) generalize the problem... [Pg.234]

Consider a standard newsvendor with a procurement cost c and sell to his customers at a fixed unit price r. The customer demand D follows a probability density function (PDF)y(-) and a cumulative density function (CDF)F(-). The newsvendor has only one order opportunity and determines his order quantity before the actual demand is realized. If the newsvendor underorders, he will suffer lost sales. For simplicity, we assume zero shortage cost throughout the chapter. If he over-orders, he will dispose the unsold inventory at salvage price v, which leads to a loss as well. Moreover, the newsvendor has a preset target profit of t, and his objective is to choose an order quantity g to maximize the probability of achieving the target to maximize P (q) = P U(q)>t. ... [Pg.235]

Inventory/shortage cost The unrestricted variable i/, represents inventory, if ( > 0 and backlogs (shortage), when y, < 0. An example of fhe cost funchon will be... [Pg.71]

Equation 2.27 represents the objective function, which is the sum of the production cost, production changeover cost, and inventory shortage costs. Equation 2.28 is the demand/inventory balance constraint. If the unrestricted variable yi is replaced by the difference of two non-negative variables as... [Pg.71]

D, Demand for period f, f = 1,2,. ..,T c, Regular time production cost per unit in period t p, Overtime production cost per unit in period t p > c,) h, Inventory holding cost per unit in period f b, Backorder (shortage) cost per unit in period t R, Regular time production capacity in period f O, Overtime production capacity in period f... [Pg.77]

A total of 17 locations of demand points are also proposed as candidate of LDCs that would be selected. Fixed cost for opening the LDCs is US 500 (1US = 10,000 IDR) referred to Kusumastuti et al. (2013). The transportation costs from collection centers to any destination (either LDCs or refugee shelters) and from LDCs to the shelters per kg per km are assumed US 0.0034 and US 0.0042. The distances between locations are measured using Google map. Shortage costs (in US ) for rice, noodle, and preserved food are 6, 5, and 8, respectively, while penalty costs for unfair distribution are set a million time of shortage costs. Locations of collection centers, candidate LDCs, and demand points are shown in Fig. 4. [Pg.291]

Benkherouf, L. and Sethi, S.P. 2010. Optimality of policies for a stochastic inventory model with proportional and lump-sum shortage costs. Operations Research Letters, 38, 252-255. [Pg.191]

The shortage cost is expressed as a multiple of the holding cost because in a system with very high service level the holding cost is a prominent cost factor, and it can be used to approximate the total installation costs (see Silver et al. 1998). The lead time for all the installations is taken as one in this study because the shipped quantity from an upstream member reaches the downstream member in the beginning of the next period. [Pg.364]

HTOC dTSC oTHC TOC = Total Ordering Cost, TSC = Total Shortage Cost, THC = Total Holding Cost... [Pg.372]

If // is the holding cost per unit per unit time, p the fixed shortage cost per unit per unit time, and S the fixed order cost per batch, Gallego suggests a batch size of Q, where... [Pg.360]


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See also in sourсe #XX -- [ Pg.385 ]




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