Inventory Management for Bus and Rail Public Transit Systems Final Report (1995) / Chapter Skim
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IV. PERFORMANCE INDICES FOR ASSESSING INVENTORY MANAGEMENT
IV. PERFORMANCE INDICES FOR ASSESSING INVENTORY MANAGEMENT
Pages 27-48
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From page 27... ...
The primary task of inventory management is to effectively balance these two objectives so that inventory is available to sufficiently support the demand for inventory items, while at the same time controlling the dollars tied up in inventory. Inventory management performance indicators usually measure the performance of one of the two primary objectives.
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From page 28... ...
. Inventory Amount Indicators 19% 48% 47% 57 /o 41% Toad Inventory Dollars ~19% T 39% ~27% T 57% ~31% DoDars per Vehicle | 0°/O | 9% | 20% r 0% | 10% Inventory Turnover | 0% | 9% ~7% | 29% | 7% Availability/ServiceIndicators | 10% | 45% 1 47% | 86% 1 36% % rhxnand Feed 1 0% ~3% 1 13% 1 57% 1 8% Number of Stockouts 1 0% | 21% | 27% | 0% 1 13% Number of Back Orders 1 60/0 T 210/0 ~27% ~860/0 ~22% TirnetoF~Backorders | 3% | 0% | ~ 0% | 0% | 1% Vehicles Out of Service | 0% | 6% | 7% | 14% | 5% _ Inventory AccuracyIndicators ~32% ~73% T 60% ~86% r 57% Dollar Vananoc ~10% 1 42% 1 27% 1 29% 1 27% Item Vanance 1 23% 1 54% 1 47% 1 71% 1 43% Management Cost Indicators | 0% | 9% | 7% | 0% | 5% % Inventory Carrying Cost ~0% ~9% | 7% | 0% | 5% .
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From page 29... ...
Therefore, the survey provides sufficient information to analyze and benchmark inventory performance indicators, even though some indicators may not currently be in widespread use in the public transit industry. 4.2.2 Definition and Calculation of Performance Indicators In some cases, the survey respondents defined or calculated perfom~ance indicators differently.
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From page 30... ...
Note: The survey respondents provided inventory turnover values based on a variety of time periods and average "total inventor dollars". To ensure consistency, the inventory turnover was calculated for each agency using the 1993 total inventory dollars and the average monthly usage times 12.
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From page 31... ...
Note: Sconce months on hand and inventory turnover are mathematically the inverse of each other, only inventor turnover is benchmarked and examined in this report. Any inferences regarding turnover are also valid for months on hand, and benchmark values for months on hand can be determined using the inverse of the benchmark values for monthly turnover (or annual turnover divided by 12~.
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From page 32... ...
These instances are averaged over a period oft~me to yield the "average time to fib backorders". This indicator measures inventory management performance in resolving unavailable inventory items.
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From page 33... ...
It teds how inaccurate an agency's records are based on total inventory dollars, and is used to adjust the book value of inventory. Absolute Dollar The "absolute doDar vanance" is the sum of the doLar variances for Variance each individual inventory item (SKU)
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From page 34... ...
This indicator assists in measuring the degree to which inventory management anticipates and reacts to changes in fleet mix and parts storage requirements. Inventory Dollars per "Inventory dollars per person" is the total inventory dollars divided by Person the number of people with inventory management and control 34
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From page 35... ...
8. Bus Inventory Dollars per Vehicle Rail Inventory Dollars per Vehicle Annual Bus Inventor Tumover Annual Rail Inventory Turnover Bus Percent Demand Filled Mill Rate)
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From page 36... ...
In particular, for comparing benchmark values between public transit agencies, the characteristics of the public transit agency or the agency's fleet may have an impact on inventory performance. For example, the population of the agency's service area, the number of annual passenger miles, the percent of foreign manufactured vehicles, or the average age of the Beet may have identifiable elects on inventory perfo~nance indicators.
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From page 37... ...
This correlation is not high enough to consider annual bus passenger miles as a factor when monitoring bus inventory dollars per vehicle. 4.3.2.2 l-Tests for Category Data Some sunrey questions asked the respondent to check a category, such as whether the agency's service area was urban, suburban, rural, or some combination.
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From page 38... ...
4.3.3 Effect of Transit Agency Characteristics on Inventory Performance Indicators The following transit agency characteristics from survey Section I (Agency Profile) were analyzed: Service Area Characterized as Urban/Suburban/Rural Service Area Population Agency Operating Cost Annual Material Purchases by Mode (Bus, Rail)
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From page 39... ...
In order to conclude that the average values of the inventory performance indicators were different between categories, a category had to have at least three (3) responses and the t statistic confidence level had to be at least 90%.
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From page 40... ...
Although bus dollars per vehicle was affected by five categories, the results were not sufficient to draw a conclusion. 4.3.3.2 Service Area - Population Survey responses for each of the following service area population categories were analyzed against the others for each ofthe 15 inventory performance indicators, resulting In 225 t-tests: Over 1,000,000 500,001 - 1,000,000 200,001 - 500,000 100,001 - 200,000 50,001 - 100,000 Less than 50,000 Using the same cntena, a minimum of three responses per category and a 90% confidence level, the following differences were found: Bus dolIa~IveWcle - 2-500K (15)
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From page 41... ...
Bus inventory turnover 52 .0747 .0056 Rail inventory turnover 13 .0578 .0033 Stockout % of SKUs 35 .1368 .0187 Bus inventory dolIars/vehicle 59 .0002 .0000 Rail inventory dodars/vehicle 12 -.2695 .0726 % items out of balance 47 -.0654 .0043 Bus % fill rate 46 .0756 .0057 Rail % fill rate 10 .3946 .1557 Bus % obsolete items 42 .0333 .1100 Rail % obsolete items 9 .5783 .3344 Bus days to fill backorders 42 -.0995 .0099 Rail days to fill backorders 6 -.2506 .0628 Inventory dollars per person 59 .2368 .0561 Person dolIars/Invento~y dollars 38 .0629 .0040 Transactions per person 52 .0599 .0036 The above correlation coefficients reveal that there is no significant correlation between agency operating cost and inventory perfonnance indicators. 4.3.3.4 Material Purchases by Mode Bus material purchases and rail material purchases were correlated with bus and rail inventory ~· · .
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From page 42... ...
The bus and rail annual passenger miles was correlated with bus and rail inventory performance indicators with the following results: Number of Variable Responses (n) Correlation Coefficient of Coefficient (r)
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From page 43... ...
1 Differences Between Bus and Rail (Mode! The average value of bus and rail inventory performance indicators were compared using t tests with the following results: Confidence Level Perfonnance Indicator Bus Rail for Difference Annualinventoryn~nover 1.74 0.71 99.998% Inventory dollars per vehicle $5,027 $37,497 99.1% °/0 fin rate 89.0% 86.1% 35.3% %obsoleteinventory 9.2% 6.1% 74.8% Days to fig backorders 16.4 2S.3 64.C9/o As the results show, transit agencies carry significantly more inventory per vehicle to support rail service than bus service.
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From page 44... ...
~ 117 .0125 °/0 items out of balance 50 -.0349 .0012 Inventory dollars per person 65 .2385 .0569 Person doDar~r~nventory dollars 40 .0534 .0029 Transactions per person 61 .1422 .0202 The above results show that there is no significant correlation between the number of vehicles and inventory performance indicators. To test this conclusion further, separate correlations were run between inventory performance indicators and subsets of the survey respondents based on the four categories defined by number of vehicles: Small Properties Medium Properties Large Properties Very Large Properties 50 or fewer vehicles (3 ~ survey respondents)
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From page 45... ...
4.3.4.7 Summary of Fleet Profile Effects The results of the analysis of fleet profile characteristics (survey Section ~ against inventory performance indicators are that fleet profile characteristics, except for mode, have no statistically significant effects on inventory performance indicators. The difference between the bus and rail inventory performance indicators for turnover and dollars per vehicle are significant at the 99% confidence level.
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From page 46... ...
For example, if inventory turnover were significantly correlated with agency operating cost, the benchmark value for Hanover would depend on the agency's operating cost. However, as the analyses summarized in this section show, there were no significant effects between an agency's characteristics and fleet profile and the inventory performance indicators.
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From page 47... ...
fleet types) 100 or more vehicles Annual Inventory Tumover 3.3 6.1 7.8 3.4 52 1.74 0.71 2.7 Inventory Doldars per Vehicle $15,793 $13,271 $22,710 $1,800,000 $5,027 $37,498 $26,040 -$65,100 5.1 $10,010 -$38,1 15 5.7 $37,330 Maximum The above chart compares public transit bus and rail annual inventory turnover and inventory dollars per vehicle to the same indicators in other industries.
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From page 48... ...
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