Improvement of the Inventory Management System : A Case Study in Make-To-Order Production

Abstract

This research studied inventory management system of plants operating business of production to order for machinery parts and metal works upon design. The main materials of this plant are consisted of metal sheets including steel sheets. stainless sheets; shape metals including pipe. angle bar. flat bars ; and socket, hinges, screw and nut. etc. Metal sheets and shape metal were selected for studying by using ABC analysis technique. Consequently, 19 items of A group. 4 1 items of B group and 204 items of C group were obtained. Subsequently, materials in A group were arranged according to turnover rate in descending order. The first, second and third materials (i.e., SPCC 3.2t, SPCC 2.3t and SPHC P/O2.3t) were selected for studying. Variation of material demand was measured by using Peterson-Silver Rule. From dividing the demand formats into certain demand and uncertain demand, it could be concluded that these three materials had certain demand format therefore it is impossible to use Economic Order Quantity (EOQ).As a result. three forms of Heuristic method (Silver-Meal, Least Unit Cost and Part Period Balancing) were used for comparing the most proper method. From the results of these three methods, there was no method could be used to reduce the expense of inventory management solely. Each method was appropriate for different materials as follows: SPCC 3.2t was appropriate with Part Period Balancing while spec 2.3t was appropriate with Silver-Meal and SPHC P/O 2.3t was suitable with Silver-Meal and Part Period Balancing. In addition, this research also found that Least Unit Cost was inappropriate with inventory management because the cost of these three metal materials was higher than other methods.