Maximum quantity determination inventory policy for fast-moving products in convenience store distribution center

Abstract

This paper evaluated the distribution center's performance of X Company (later on is referred as X Co.). As one of the major companies that have activities in the field of product distribution and sales of Fast Moving Consumer Goods (FMCG), X Co. required in order to meet customer needs and demands. The phenomenon of over-stock and out of stock occurring in DC make identifying the root cause must be traced. Main objective of this research is to determine appropriate inventory policy in DC, in order to maintain the supply of stock and improve the service level of distribution centers. Perpetual policy (Q model) is proposed to be the most suitable yet applicable model for X Co. Determination of the maximum quantity originally done intuitively without correct standardized Q Model. As a result, service level increased from 68% to 96.6% for all 170 simulated items in June 2013.