Determining optimum (s, S) levels of floor stock items in a paint production environment

Abstract

In this paper, we develop an (s, S) inventory model to determine inventory levels of floor stock items (FSIs) in a manufacturing company producing paint products. FSIs are raw materials that are transferred from the main warehouse to be stored at the periphery of production area for a temporary period of time to be used in the manufacturing process. These items are commonly and frequently used materials during production; hence the optimum inventory levels of these materials to be carried in the floor stock storage areas (FSSAs) to prevent costly interruptions in the manufacturing processes should be determined. We model the problem as a multi-item, single-echelon (s, S) inventory policy where items can be stored in stocking locations that are supplied by an indoor vendor (i.e., the main warehouse) with infinite capacity. The objective is to minimize the average number of daily replenishments dispatched from the main warehouse subject to the capacity of FSSAs and satisfying a pre-defined fill rate. We consider stochastic demand and lead time, and use simulation for the optimization purpose. Finally, we present and discuss the numerical results of the study along with our conclusions.