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Improving stock levels in retailers’ stores by proposing a model based on literature and historical data

Poll, T.A. van der (2017) Improving stock levels in retailers’ stores by proposing a model based on literature and historical data.

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Abstract:A retailer and wholesaler (37 stores, 2DC's) of technical components was looking for a way to improve their inventory management to achieve a 98% fill rate. First, an analysis of their sales and inventory data was done to get an idea of how their current inventory is performing. This resulted in a non-consistent image: Many non-movers were observed: almost 25% of their products was not sold for at least a year. What’s more, is that regional difference plays a part. Between two of their stores, analysis showed the difference to be about 20%. Lastly, the replenishment lead time of 2 days lead to the idea that demand for their products is highly unstable. To cope with these behaviors, the inventory was divided into three groups and an appropriate probability distribution was used: Fast (16 items, Normal, Gamma), Slow (2813 items, Poisson), Lumpy (5424 items, Compound Poisson). For the first two groups respectively, the expected savings are a factor 1.54, 1.78 and for the ‘Lumpy’ group, the inventory is actually too low to maintain the fill rate by a factor 1.2. It is recommended to implement the Gamma and Poisson distribution, but the Lumpy items need more research.
Item Type:Essay (Bachelor)
Clients:
Technische Unie, Alphen aan den Rijn, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Industrial Engineering and Management BSc (56994)
Link to this item:http://purl.utwente.nl/essays/73977
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