Matching Supply with Demand An Introduction to Operations

Matching Supply with Demand: An Introduction to Operations Management Gérard Cachon Christian. Terwiesch All slides in this file are copyrighted by Gerard Cachon and Christian Terwiesch. Any instructor that adopts Matching Supply with Demand: An Introduction to Operations Management as a required text for their course is free to use and modify these slides as desired. All others must obtain explicit written permission from the authors to use these slides. Slide 1

O’Neill’s Hammer 3/2 wetsuit Slide 2

Hammer 3/2 timeline and economics Slide 3

Oneill data Slide 4

Oneill data Slide 5

Forecasts vs actual graph Forecasts and actual demand for surf wet-suits from the previous season Slide 6

Empirical distribution function for the Hammer 3/2 using historical A/F ratios Slide 7

A portion of the Standard Normal Distribution Function Table, F(z). Slide 8

Empirical vs normal demand distribution Empirical distribution function (diamonds) and normal distribution function with mean 3192 and standard deviation 1181 (solid line) Slide 9

Balancing the risk and benefit of ordering a unit Slide 10

Hammer 3/2's expected loss sales table if the empirical distribution is the demand forecast Slide 11

Performance measures relationship Expected demand, m Fill rate Expected sales If Normal demand, s Loss function table Order quantity, Q, and, if Normal demand, z = (Q – m)/s Distribution function table Expected lost sales In-stock probability Stockout probability Price, cost, salvage value Slide 12 Exp. left over inventory Expected profit

Service measures of performance Slide 13

Pareto curve Slide 14