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Improving the inventory management at a production facility

Milner, M.S. (2022) Improving the inventory management at a production facility.

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Abstract:This research proposes an inventory management tool which can help Voortman Parts Manufacturing 1 (VPM-1) reduce the unavailability of components (SKUs) directly consumed in the production of handling modules and help improve overall control of the inventory. The tool classifies the SKUs according to a stepwise approach, in which the SKUs are classified based on their distribution by value, net lead time and their CV of demand during lead time. Each class is assigned either a continuous or periodic review policy based on the characteristics of that class. As demand for the handling modules is known a fixed number of periods before the due dates, the resulting demand lead times, based on the production routing for the SKUs, are taken into account when determining the control policy parameters. A simulation study is performed where the proposed policies are tested using historical demand data of 2021 and the performance compared to the current situation. The proposed policies can lead to a significant average fill rate increase against a relatively minor increase in average on-hand inventory value. Besides the potential to significantly reduce the unavailability of SKUs implementing the inventory management tool will: (1) increase purchasing control, (2) decrease the firefighting in the office and on the production floor, (3) create the possibility to increase the flexibility of the production planning and (4) provide VPM-1 the opportunity to understand the implications that longer supply LTs may have on the inventory.
Item Type:Essay (Master)
Voortman Steel Machinery, Rijssen, The Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
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