Analysis of inventory management of slow-moving spare parts by using ABC techniques and EOQ model-a case study

Abstract

Computer spare parts (CSPs) inventory management (IM) is very important for many companies. Excess inventory leads to high storage costs. On the other hand, the lack of CSP has a strong impact on the quality of service. This study was conducted by Power-One Jordan Computer Hardware-Software company (POJCHSC), Amman, Jordan. The focus area was the IM department and the target sample was employees working in the management department. The results showed that factors influencing the management of slow moving CSPs include production costs, obsolescence and CSPs dependence availability and transportation costs. By forecasting during the study, the results showed that the demand for adapters and chargers would increase by 20%. This demand forecast was performed using the economical order quantity (EOQ) model. The percentage of profits made by this company is 48%, and this requires some intervention to prevent losses. The results of this study are useful to the company, as well as to other similar industries that deal with slow-moving items. These results will help to simplify IM of slow-moving items. When we focused on POJCHSC manufacturers, the disadvantages of using the traditional ABC classification model were identified. Therefore, there is a need to have an ABC classification that is improved and which takes into consideration the criticality of the slow-moving CSP.