Theoretic and Methodological Background

The justification of the needs for inventories (Npl) necessary for carrying out the plan is achieved by means of several methods:

- the direct calculation method-by piece or product;

-the method of the calculation based on analogy:

-the method of the calculation based on type-variety;

- the “dynamic coefficients” method.

During the administration period, inventories (current stock, in-transit stock, safety stock, etc.) are piled to ensure the continuity of consumption.

The current stock represents the quantity of materials which is stored in the warehouses of a company in order to satisfy the consumption demand in the volume, structure and regularity required in the period of time between two successive supplies.

The safety stock represents a permanent stock which deals with unpredicted situations, generated by the consumption rate and the times of delivery.

Knowing the time between two successive supplies in the case of a certain material allows us to determine the volume of the minimum critical stock.

The alert stock represents the quantity in a stock below which the order must be placed (it is the sum between the minimal current stock and the safety stock).

This alert stock, also called critical stock or point of order, which depends on the period of time in which delivery takes place, can be obtained as follows:

- (consumption/day X time of delivery), when the time of delivery is shorter than the time of consumption;

- (consumption/day X time of delivery) - Current orders, if the time of delivery is larger than the time of consumption.

The balance which must exist between the consumer’s material needs and resources is rendered in the formula:

Npl + Ssf =Spî + Ari +Na in which:

Ssf =the stock at the end of the period;

Spî =the preliminary stock of resources for the beginning of the period; Ari =other internal resources;

Na =the requirements to be met by suppling the necesary materials.

In its turn, the preliminary stock at the beginning of the administration period is obtained using the following formula:

Spî=Sef +Io- Co in which:

Sef = the stock that exist at the moment of drawing up the strategic plan of supplying;

Io = the entering of materials in the moment of drawing up the strategic supplying plan until the beginning of the administration period;

Co = the consumption of materials until the beginning of the administration period.

From the economic point of view, besides the two types of costs presented above, the costs connected with insufficiency of the stock (the shortage cost) must also be taken into account. The shortage costs correspond to an opportunity cost which is expressed by the lost sales or the penalties owed to customers because of having failed to perform a contract in due time.

In practice, the problem of an optimal rate raises, that is finding a supplying rate so that the stock administration to be carried out at the lowest cost for the company.

The “Pure Wilson” stock administration model aims at minimising the administration cost of the stock (the supplying cost) which has two components-the stockpiling cost and components-the cost of running components-the orders) - and it is calculated with the formula:

y = Q

p

Q

C

^s ₊

N

^a

C

^c

2

(when the stockpiling cost is expressed in percentages of the buying unit price) or

y = Q Q

C

^s ₊

N

^a

C

^c

2

θ

(when the stockpiling cost is expessed in m.u./day/warehouse)

Na – the requirements to be met by suppling the necesary materials for the administration period taken into account⁵;

Q- the volume of the order;

Q = the stock owning cost when the stockpiling is expressed in percentages of the buying unit price.

2

C

^s

Q

θ

= the stock owning stock when the stockpiling cost is expressed in m.u./day/warehouse.

Q

C

N

^{a c}₌ the cost of securing orders.

In oder to find out the minimum value of the supplying cost , we

differentiate the above mentioned relation with respect to Q and we equal it with zero:

5 In the case of the optimizing models, the quantity necessary to achieve the production plan-Npl-is taken into account.

when the stockpiling cost is expressed in percentages of the buying unit price.

Or Q =

C C N

S c a

θ

2

if the stockpiling cost is expressed in

m.u./day/warehouse.

The quantity (the volume of the orders) can also be calculated by the formula:

Q=Na/X In which X=the number of orders.

The „Pure Wilson” stock administration model presented above starts from the following assumptions:

-the sells or the consumptions are regular;

-the fee of the supplier is unique.

Unlike the preceding model, Wilson’s model and the supplier’s regressive tariff determines the optimal quantity for each price of the supplier which leads to minimizing the cost of the stock (formed of the administration cost of the stock and the acquisition cost of the raw materials).

Wilson and shortage model also aims at minimizing the administration cost which, besides the two cost categories (the cost of possession and the acquisition cost), contains the shortage cost, too.

The three Wilson models above mentioned are administration models of stocks for the certain future.

Regarding the administration models of stocks for an uncertain future, mention can be made of the following:

- the calendar administration model which starts from the assumption that, during the delivery period, the demand is random and determines the optimal level of the stock at the beginning of the re-supplying period, when the supplying orders occur at regularly;

- the administration at the order point aims at determining the quantity of the stock which is to meet a random demand and to maintain the safety stock.

The management requirement planning budget must reflect the following in time, in stages:

- the orders and supplying budget;

- the consumption budget;

- the stock budget.

Drawing up a supplying budget can be one in two ways:

- quantitatively, when the stress is laid on achieving the supplying goal;

- in connection with the value, when it is used in drawing up the aggregate budget, the cash budget and the financial positions.

In document BULETIN ŞTIINŢIFIC (Page 21-25)