Inventory Model for Ordering a Varieties Material from a Single Source of Building Material Shop in Khon Kaen Province: Case Study

Abstract

This research aimed to formulate the inventory model of material B material C and material D. Total inventory cost comprises ordering cost, holding cost and transportation cost. The demand of three materials were forecasted by time series forecasting model. The best forecasting model of each material was Moving Average with Linear Trend, Linear Regression and Single Exponential Smoothing with weight average (α) equal to 1.00 respectively gave the lowest of means absolute deviation and mean absolute percentage error. Then demand per month of material B material C and material D were able to forecast. Inventory management model was applied for material B material C and material D to find the appropriate ordering period, economic order quantity, and appropriate ordering frequency. There was statistically significant difference of average total inventory cost for material B material C and material D of the current and the purposed inventory model. The average inventory total cost of purposed inventory model was lower than the average inventory total cost of current by 70.51% 65.37% and 68.63% respectively. In addition, there were not statistically significant difference for the current and the purposed average inventory quantity of material B. But there was statistically significant difference for the current and the purposed average inventory quantity of material C and material D. However, the average inventory quantity of material B and material D for proposed inventory model were lower than the current inventory quantity by 23.14% and 58.32% respectively. Whereas, the proposed average inventory quantity of material C raised the current average inventory quantity by 10.19%.