Comparing Application of R-Model over Conventional ABC Analysis in a Pump Manufacturing Organization

Abstract

Inventory control technique is widely employed in every manufacturing organization and ABC analysis is traditionally used for selective inventory control in a supply chain, or in the production system. The main purpose of ABC analysis is to classify stock keeping units to control the high value, medium value and low value items. ABC analysis concentrates quantities of inventory items and inventory values only. Different criteria such as lead time and criticality of inventory items may be initiated to manage the inventory items in a better way. Since consideration of those criteria is impossible for ABC inventory control technique, different multi criteria based inventory control techniques are applied to manage stock items. In this article, selective ABC inventory control technique has been applied to manage inventory items of a pump manufacturing organization situated in the Eastern region of India. Procurement lead time for a stock item plays an important role in supply chain as well as production also. So, lead time criterion in different inventory control strategies ensures an appropriate inventory management system. An AHP based Multi Criteria Inventory Control (MCIC) technique has been adapted regarding different criteria, such as quantities of inventory items, inventory values and lead time criteria to manage inventory items of the pump manufacturing organization. This MCIC model is a weighted linear optimization technique, termed as ‘R-model’. To evaluate the performance of conventional ABC analysis and R-model, a comparison is drawn based on the safety stock inventory cost and fill rate of the inventory items. The entire investigation is capable to find out the cost effective inventory control technique.