Inventory Management for Bus and Rail Public Transit Systems Final Report (1995) / Chapter Skim
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V. THE EFFECT OF ORGANIZATIONAL STRUCTURE ON INVENTORY MANAGEMENT PERFORMANCE
V. THE EFFECT OF ORGANIZATIONAL STRUCTURE ON INVENTORY MANAGEMENT PERFORMANCE
Pages 49-84
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From page 49... ...
In addition, selected agency and fleet characteristics were included in the analysis to determine if these factors, combined with organizational factors, have an effect on inventory performance. The organizational and inventory management decision factors, agency and fleet characteristics, and inventory performance indicators used in this analysis are summarized below in sections 5.1.1, 5.1.2, and 5.1.3.
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From page 50... ...
6. Bus Inventory Dollars per Vehicle Rail Inventory Dollars per Vehicle Annual Bus Inventory Turnover Annual Rail Inventory Turnover Bus Percent Demand Filled (Fill Rate)
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Rail variables were excluded for bus inventory perfonnance indicators and vice versa. For example, the number of buses was not included in the regression analysis for rail inventory dollars per vehicle.
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From page 52... ...
Regression analysis is a statistical process that defines a formula for predicting the value of a performance indicator using the values of organizational and management decision factors. For example, a regression equation can be derived to predict the value of annual inventory turnover using the number of buses, the number of individuals assigned to inventory management, and whether the authority uses an automated inventory system.
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From page 53... ...
Step-w~se linear regression was run on the remaining survey data variables for each inventory perfonnance Indicator. The significance level for including variables In the equation was varied to observe the resulting effect on the variables included in the regression equation, the amount of variance in the independent variable explained by the equation, and the overall confidence level of the prediction.
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From page 54... ...
For example, if the confidence level is 92%, one can infer with 92% confidence that the predicted value of an inventory performance indicator is not equal to zero.
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From page 55... ...
Since the total number of employees involved with inventory provides a more comprehensive view of inventory management activities, it is used in inventory performance indicators "per person" (such as transactions per person or dollars per person)
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From page 56... ...
The findings for the effects of organization type are: Agencies with Type ~ organization have less bus inventory dollars per vehicle than those with Type 2 and Type 5. Those with Type 4 also have less bus inventory dollars per vehicle than Type 5 organizations.
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From page 57... ...
Percent obsolete bus inventory: Type 5 -- 12.9% Percent obsolete rail inventory: Type 5 -- 8.5% Type 1 -- 6.2% Type 3 -- 5.8% (96% confidence) (98% confidence)
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From page 58... ...
Agencies with a filll time head of the inventory management group: have higher annual bus inventory turnover-2.02 vs. 1.37 · take less days to fill bus inventory backorders-13.2 vs.
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From page 59... ...
. Agencies with inventory organizations reporting to the sub-department level have lower bus inventory dollars per vehicle than those reporting to the department level or executive level: 59
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From page 60... ...
sub-department ~ 90% confidence Days to fill rail backorders: reporting to executive level reporting to department level executive vs. department12.8 days 50.5 days 97°/O confidence Agencies with inventory organizations reporting to the sub-department level manage fewer inventory dollars per person than those reporting to the department and executive level: Reporting to sub-dept.
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From page 61... ...
(The survey results were not sufficient to examine the effect of the actual value of the targets.) Set target inventory dollar levels: Agencies that set target inventory dollar levels: · have higher annual bus inventory turnover-2.00 vs.
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From page 62... ...
Agencies that use maintenance forecasts only have lower bus inventory dollars per vehicle than those using all other combinations: Forecasts only-$1,569 reorder point only $5,727 reorder point & forecasts-$5,03 1 ad three - $5,537 (99% confidence) (97% confidence)
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From page 63... ...
Agencies with target safety stock levels of 20% or greater: · have higher rail inventory dollars per vehicle ($67,092) than those with less than 20% ($19,181)
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$96,465 have higher bus inventory dolIars/vehicle-$6,050 vs. $4,247 · have higher rail inventory dollars/vehicle-$41,989 vs.
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From page 65... ...
All rail properties responding to the survey have multiple storehouses, so this factor could not be used to analyze rail inventory performance indicators. In addition, the total number of storehouses has no correlation with any inventory performance indicators (rail, bus, or total)
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From page 66... ...
~ 87°/O and 88% confidence, respectively. Agencies with less than 100°/0 coverage have higher annual bus inventory turnover than those with less than 75%, less than 50%, and 0%: less chart 75% - 1.48 less than 50% - 1.41 0%-1.27 66 (85% confidence)
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From page 67... ...
Agencies with maintenance responsibility for stores manage take more days to fill bus inventory backorders (26.3) than those with stores reporting to an inventor management organization (14.0)
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· take more days to fill bus inventory backorders-17.6 vs. 9.3 (90% confidence)
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From page 69... ...
Rail inventory turnover: automated - 0.98 both-0.45 (96% confidence) Bus properties that use manual systems solely have lower dollar Inventory levels per vehicle ($1,877)
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From page 70... ...
There is no correlation between the amount of information available to stores personnel and the inventory performance indicators. 5.4 RELATIONSElIPS BETWEEN INVENTORY ORGANIZATION MANAGEMENT DECISIONS AND INVENTORY PERFORMANCE This section describes the quantitative relationships between inventory performance indicators and inventory organization and management decision factors.
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From page 71... ...
5.4.~. Bus Inventory Dollars per Vehicle The following table summarizes the regression equation for bus inventory dollars per vehicle based on the factors that were determined to be the best predictors: Factor Coefficient Confidence Level Constant 2767 99+% Bus inventory dollars .000361 99+% Organization type 2 7715 994% Use noun inventory system -6007 99/ Repontoma~ntenance 1951 97% Decentralized organization -2992 95% Separateinventory planning 2731 98% Annual bus maters purchases -.000056 96% The coefficient of determination (r2)
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From page 72... ...
Annual Bus Inventory Turnover Coefficient Confidence Level 55623 - 649 538 61.2% 52.6% 99o/o The factors selected to predict annual bus inventory turnover were: Factor Constant Separate inventory planning Organization type 5 Cost of inventory personnel Avg. annual bus miles per vehicle Stock components in inventory Percent of inventor items on blanket POs Purchasing included in inventory organization Total bus inventory dollars Coefficient of determination bred: Adjusted r2: Recession confidence level: 85.6% 80.2% 99+o/o 5.4.4.
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From page 73... ...
The factors selected to predict bus percent fib rate were: Factor Constant Percent safety stock % coverage of storehouses by storekeeper Have direct purchase authority for inventory Total employees involved in inventory mat. Publish a catalog of inventory material Coefficient of determination (r31: Adjusted r2: Regression confidence level: 27.4% 19.5% 99o/o 5.4.6.
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From page 74... ...
Average Days to Fill Bus Inventory Backorders Only one factor was selected to predict the average days to fill bus inventory backorders. This was the only factor with over 90% confidence that the coefficient was not equal to zero.
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From page 75... ...
To derive an equation with a confidence level for the constant that is greater than 90%, all factors except "inventory orgaruzation reports to maintenance" must be eliminated Dom the equation. Factor Constant Inventory organization reports to maintenance Have multiple storehouses Have buses Total number of replenishment methods used Stock components in inventory Set target inventory levels Coefficient of determination bred: Adjusted r2: Regression confidence level: 5.4.~.
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From page 76... ...
available in the storehouse with only 58% confidence that the coefficient was not equad to zero. Factor Coefficient Confidence Level Constant 3.10 98% Total rail Inventory dollars 0.00000047 99+% Use "other'' technology -3.9S 94% Coefficient of determination arty: 91.9°/0 Adjusted r2: 89.2% Regression confidence level: 99+°/0 S.4.13.
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From page 77... ...
0.00043 99~% Use manual inventory system 0.88 99+% % coverage of storehouses by storekeeper 0.0028 99+% Organization typed 0.13 95% Separate inventory planning -0.085 90% Use fixeUpenod method 0.18 98% Use blanket POs for inventory -.085 93% Coefficient of determination bras: Adjusted A: Regression confidence level: 78.4% 73.2% 99+o/o S.4.~. Total Inventory Transactions per Person No regression equation that could be denved to predict the total inventory transactions per week per person that contains a coefficient with a confidence greater than 90%.
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From page 78... ...
· The existence of a full-time head and a separate inventory planning function appear to be key organizational attributes leading to the service level gains of inventory organizations. In addition, these attributes appear to contribute to more efficient management of inventory dollars.
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From page 79... ...
These organizations have lower inventory dollars per vehicle and a lower percent obsolete items. However, inventory organizations reporting to maintenance manage less inventor dolBars per person and process fewer inventory transactions per person.
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From page 80... ...
Only isolated effects were observed relating to these variables. Using blanket orders resulted in higher inventory dollars per vehicle for both bus and raid inventones, and the more rail inventory material covered by blanket orders, the lower the service level (fill rate from inventory.
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From page 81... ...
Written policies and procedures have minimal eject on inventory performance, but assist in the efficiency of managing inventory. Written policies and procedures and a published inventory material catalog both allow organizations to manage more inventory dollars per person, but contribute to a higher percent obsolete items.
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From page 82... ...
Agencies with automated inventory systems and/or "other'' technology process more inventory transactions per person, manage more inventory dollars per person, and have higher turnover for both bus and rail inventory. Agencies with manual system have lower inventory dollars per vehicle, and those with both have higher percent of items out of balance.
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From page 83... ...
at transit agencies. Therefore, the conclusions should be developed into hypotheses for more detailed testing in a more controlled environment where individual effects can be more effectively isolated and quantified.
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