Improving productivity by using strategic inventories: Theoretical issues and field results

Abstract

The study investigated the effectiveness of a new proposed inventory control technique to improve materials productivity for make-to-order and/or assembly-to-order companies. This new model is designed to manage peaks of finished products market demand, allowing the operative working capital to be reduced. The model fits real-life manufacturing environments where a satisfactory level of return on investments in capital goods is a prerequisite. Furthermore, the model can face the changing external environment and the parameters upon which production system performances depend. This is particularly true when the control technique is required to react to a reduction of the delivery lead-time, which is commonplace of the majority of competitive markets. Finally, a multistage production system environment is analysed early and the applicability of the model in various real-life industrial environments is suggested. To this purpose, a set of case histories of Italian companies belonging to different branches of industry is reported.