ThaiScience
ThaiScience
ENGINEERING JOURNAL CHIANG MAI UNIVERSITY
Volume 26, No. 02, Month AUGUST, Year 2019, Pages 1 - 14
Front bumpers inventory policy improvement for an automotive spare parts distributor
Artitaya Tengtragul and Naragain Phumchusri
Abstract Download PDF
The purpose of this study is to improve the “Front Bumpers” inventory policy for an automotive spare parts distributor. Currently, this company has many items with too much inventory which lead to sunk cost and some items with insufficient stocks and inventory shortages, leading to low customer satisfaction. The current policy has to be improved and we have found that the Naïve forecasting method that the company currently uses has a very high error of 38% MAPE. In addition, the company’s Safety Stock is not taken into account of demand variance. Thus, the company’s Inventory Target is currently as high as 5.2 times of monthly demand. This research is divided into 2 parts. The first part is to identify the forecast method that can provide accurate result. Moving average method, Holt’s exponential smoothing method and ARIMA are compared. The second part is to improve inventory policy by analyzing product demand and supply patterns. The result of the research is evaluated by comparing inventory stock and percent allocation (i.e., the ability to satisfy customer’s demand by company’s stock), before and after implementation of the new policy, using the real demand from January to December 2016. The result shows the Box–Jenkins (ARIMA) provides the lowest and acceptable error (MAPE≤20%). The inventory policy that is most suitable is the Base Stock Level which can reduce the inventory stock from 5.2 to 4.0 times monthly demand, and can still provide acceptable % allocation of 81-100% for all products considered in this research.
Keywords
NoneENGINEERING JOURNAL CHIANG MAI UNIVERSITY
Published by : Faculty of Engineering Chiang Mai University
Contributions welcome at : http://researchs.eng.cmu.ac.th/?name=journal
