Inventory Management Process Research Articles

Modeling Massive RFID Data Sets: A Gateway-Based Movement Graph Approach

Massive radio frequency identification (RFID) data sets are expected to become commonplace in supply chain management systems. Warehousing and mining this data is an essential problem with great potential benefits for inventory management, object tracking, and product procurement processes. Since RFID tags can be used to identify each individual item, enormous amounts of location-tracking data are generated. With such data, object movements can be modeled by movement graphs, where nodes correspond to locations and edges record the history of item transitions between locations. In this study, we develop a movement graph model as a compact representation of RFID data sets. Since spatiotemporal as well as item information can be associated with the objects in such a model, the movement graph can be huge, complex, and multidimensional in nature. We show that such a graph can be better organized around gateway nodes, which serve as bridges connecting different regions of the movement graph. A graph-based object movement cube can be constructed by merging and collapsing nodes and edges according to an application-oriented topological structure. Moreover, we propose an efficient cubing algorithm that performs simultaneous aggregation of both spatiotemporal and item dimensions on a partitioned movement graph, guided by such a topological structure.

Optimizing Inventory Using Genetic Algorithm for Efficient Supply Chain Management

Problem statement: Today, inventory management is considered to be an important field in Supply chain management. Once the efficient and effective management of inventory is carried out throughout the supply chain, service provided to the customer ultimately gets enhanced. Hence, to ensure minimal cost for the supply chain, the determination of the level of inventory to be held at various levels in a supply chain is unavoidable. Minimizing the total supply chain cost refers to the reduction of holding and shortage cost in the entire supply chain. Efficient inventory management is a complex process which entails the management of the inventory in the whole supply chain and getting the final solution as an optimal one. In other words, during the process of supply chain management, the stock level at each member of the supply chain should account to minimum total supply chain cost. The dynamic nature of the excess stock level and shortage level over all the periods is a serious issue when implementation was considered. In addition, consideration of multiple products leads to very complex inventory management process. The complexity of the problem increases when more distribution centers and agents were involved. Approach: In present research, the issues of inventory management had been focused and a novel approach based on genetic algorithm had been proposed in which the most probable excess stock level and shortage level required for inventory optimization in the supply chain is distinctively determined so as to achieve minimum total supply chain cost. Results: The analysis provided us with an inventory level that made a remarkable contribution towards the increase of supply chain cost. We predicted the optimal inventory levels in all the supply chain members with the aid of these levels. Conclusion: We concluded that it is possible to minimize the supply chain cost by maintaining the optimal stock levels that we predicted from the inventory analysis. This will make the inventory management further effective and efficient thereby enhancing the customer servicing levels.

Musictoday, LLC: Implementing a Periodic Review Inventory System

This case is used in Darden's first-year core operations class as part of a module on supply chain management. The Musictoday company provided online retailing services for such clients as the Dave Matthews Band and the Rolling Stones. But the lack of a formal inventory-management process had Musictoday concerned about future stockouts that would result in lost sales. This case covers the basics of safety stock within the context of a periodic review system. It introduces students to the periodic review system and provides them with an opportunity to link the optimal review period with the EOQ concept.

Inventory Control at Spiegel Grove

Quantitative models for inventory decision making in a multi-echelon distribution system are very challenging for most undergraduate business or engineering students. To expose students to the challenges of managing multi-echelon inventory levels in an uncertain environment, we have created the Inventory Control at Spiegel Grove classroom exercise, which simulates the inventory management process for a single product in a serial supply chain. Shipments are subject to both transportation quality variability and product quality variability, and students are challenged with adjusting their levels of safety inventory appropriately without carrying an inordinate amount of stock.

Nonlinear goal programming models quantifying the bullwhip effect in supply chain based on ARIMA parameters

In less than half a century, the supply chain management (SCM) imposed itself as a strategic expertise. Today, it lands a new era, more complex, and must be the synonymous of competitive advantage. The supply chain has essentially served as a link between customers and products, producers and suppliers. The generation of the new supply chain (SC) should be evolutionary, and should be adjusted quickly to the rise or the decrease of the various customers’ demands. Several problems of the supply chain are superimposed such as the amplification of the demand, also called the bullwhip effect (BWE). This latter is a distortion in the market demand when this demand propagates from enterprise to enterprise. Finally, at the end of the chain, the supplier of raw materials receives completely uncertain commands. Our research aims to reduce, or even eliminate, the bullwhip effect in two respects-namely increase of the stock level and reduction of the service given back to customers. The solution that we propose to the bullwhip rests on, firstly, the use of the preference functions based on a statistical chronological series analysis (Box and Jenkins method) in order to construct the different models such as demand, stock level, and the order quantity. Secondly, the integration of the decision maker preference in the demand forecast and inventory management processes.

Integrated Scheduling for Polyvinyl Chloride Processes

This study considers a scheduling algorithm and mathematical models for a real polyvinyl chloride (PVC) plant. According to general rules of the PVC plant, the basic PVC scheduling model is formulated as mixed integer linear programming (MILP). This model includes production, inventory management, packing, and shipment processes. The basic PVC scheduling model is customized for two PVC production processes with different characteristics, resulting in two detailed PVC scheduling models. An optimization algorithm has been developed to solve these scheduling models. This algorithm is a hybrid algorithm combining the genetic algorithm for integer programming (IP) and the interior point method for linear programming (LP). A heuristic technique has also been developed to reduce the number of solving LPs. Finally, the optimized results of the models were analyzed.

Information inaccuracy in inventory systems: stock loss and stockout

Many companies have automated their inventory management processes and now rely on information systems when making critical decisions. However, if the information is inaccurate, the ability of the system to provide a high availability of products at the minimal operating cost can be compromised. In this paper, analytical and simulation modelling demonstrate that even a small rate of stock loss undetected by the information system can lead to inventory inaccuracy that disrupts the replenishment process and creates severe out-of-stock situations. In fact, revenue losses due to out-of-stock situations can far outweigh the stock losses themselves. This sensitivity of the performance to the inventory inaccuracy becomes even greater in systems operating in lean environments. Motivated by an automatic product identification technology under development at the Auto-ID Center at MIT, various methods of compensating for the inventory inaccuracy are presented and evaluated. Comparisons of the methods reveal that the inventory inaccuracy problem can be effectively treated even without automatic product identification technologies in some situations.

Musictoday, LLC: Implementing a Periodic Review Inventory System

This case is used in Darden’s first-year core operations class as part of a module on supply chain management. The Musictoday company provided online retailing services for such clients as the Dave Matthews Band and the Rolling Stones. But the lack of a formal inventory-management process had Musictoday concerned about future stockouts that would result in lost sales. This case covers the basics of safety stock within the context of a periodic review system. It introduces students to the periodic review system and provides them with an opportunity to link the optimal review period with the EOQ concept.

Supply chain collaboration: the key to value creation

As global markets grow increasingly efficient, competition no longer takes place between individual businesses, but between entire supply chains. Collaboration can provide the competitive edge that enables all the business partners in a supply chain to prevail and grow. This paper presents a framework for customer‐supplier collaboration that facilitates effective and efficient supply chain operation. The paper reveals that the level of involvement of customers and suppliers differs across different supply chain processes and also across different sectors. While the involvement of customers is high in demand management and product development, the involvement of suppliers is high in transportation and inventory management processes. The paper also reveals that about 50 percent of the organizations surveyed indicate that suppliers and customers have little or virtually no role in the demand management, inventory management, and product development processes.

Current trends in material management in the shipbuilding industry

Material management in the shipyard industry has aroused considerable interest in recent years. It has been emphasised that the effective handling, storage, and flow of materials determine the successful operation of a warehouse. Production, planning, and scheduling are also important and vital in determining shop floor schedules because they minimise processing cost and material inventory cost. There is a need for proper planning and control of processes and materials, including procurement, storage, and inventory, making the process cost effective. Monitoring and tracking in the industry are thus very important in fulfilling the aforementioned objectives. Group technology also plays an important role in material management for grouping and coding. It has been reported that proper grouping and coding of materials not only reduce labour and material handling, but also reduce time and the shifting of parts to different places. This paper addresses several aspects of material management that need to be considered for efficient material handling and inventory management processes. The various aspects of material management, including material handling, inventory management, planning and scheduling, procurement and receiving, monitoring and tracking, controlling, and statusing are highlighted. It should, however, be mentioned that these facets of material management may overlap, and should not be considered in isolation. For best results, the interactions of different facets should be considered in controlling the overall economy of the industry. Recent trends of material management are also summarised. An effort has been made in this perspective to visualise the state-of-the-art in material management with special emphasis on the shipbuilding industry. Several new techniques and trends have been reported for a more efficient and cost-effective material management. These new techniques have great potential for implementation in the shipbuilding industries and need to be explored in relation to greater competition in the global market.

Inventory-Turnover Analysis

A key element of inventory management is a periodic inventory-turnover analysis, particularly among food-service operators with numerous and diverse menus that change frequently. Use of an "inventory turnover" statistic helps operators maximize the inventory investment, measures the efficiency of the inventory-management process, and uncovers problems such as slacking sales and employee theft. The measure proposed here is: food cost for the period divided by the period's average inventory value equals inventory turnover. Other ratios can be used, but all have some limitations. The inventory-turnover statistic is especially useful for comparing same-store activity, and can serve to compare similar operations within a given segment. If the inventory-turnover ratio is unstable or does not fall within a reasonable predetermined range, further investigation is warranted (to discover why sales may be slumping or to uncover theft, for example). Periodic inventory-turnover analysis provides operators with a tool for improving their inventory-management practices, especially when coupled with common precautions such as monitoring deliveries, dealing with preferred vendors, rotating stock, and keeping prices up to date.

Lead Time Management: Private and Public Sector Practices

Lead Time Management: Private and Public Sector Practices Lead time management is an important element in any materials management system. The length and variance in procurement lead time directly impacts inventory investment, demand forecast accuracy, inventory turbulence, the risk of unneeded inventories, and system responsiveness. The critical significance of lead time management, however, typically is not adequately appreciated or considered in basic Department of Defense (DOD) procurement and inventory management processes. As a result, DOD inventories relative to demand have increased, and unusable inventories continue to grow. In comparison with the DOD, leading private sector firms recognize the importance of lead time management to profitability and long-term market success. Typically they place a much a greater emphasis on time-sensitive procurement and materials management systems; in recent years, the just-in-time concept has facilitated this effort. The inherent nature of these strategies mandates active lead time management. This article examines lead time management in both the DOD and private sector environments. Drawing on data collected from private sector firms, DOD vendors, and DOD inventory managers, empirical differences in lead time profiles are developed and analyzed - and specific procurement lead time differences are developed and used to illustrate the impact on inventory investment. Finally, the article highlights DOD procurement and inventory management policies that negatively impact procurement lead times and recommends revisions to these policies. BACKGROUND In a recent article, George Stark argues that time represents the next competitive battleground in the international marketplace.(1) Further, he notes that Japanese firms have already begun to emphasize time management in the responsiveness and flexibility of their operating systems and corporate strategies. A key element of any procurement and inventory management system is effective lead time management. Procurement lead time is defined as the time required to acquire material for inventory - and is typically measured from the point in time when the requirement is identified until the time that a significant portion of the required material is delivered. Procurement lead time has two separate components - administrative lead time and production lead time. Administrative lead time is the time from the identification of a material requirement until the award of a contract for the requirement. Production lead time is the time from contract award for the requirement until the material is delivered. Most of the recent policy initiatives in DOD acquisition, including the Competition in Contracting Act (CICA) implemented in 1985, have tended to focus almost exclusively on specific deficiencies and operating problems in the basic procurement process viewed in isolation. The negative impact of these acquisition initiatives on other elements of the DOD logistics system, and on total long-term cost to the taxpayer, has received much less attention. Further, when viewed in the context of the significant revolution in logistics management strategy that has occurred in the private sector during the 1980s, these initiatives are, in large part, moving DOD in a direction that is essentially opposite to that of most successful private sector logistics systems. In these systems, horizontal management philosophies, with joint goal-setting and performance measurement across functions along with active lead time management, have become a standard. As DOD lead times increase, inventory managers often seek to compensate by increasing the investment in safety levels and to reduce workload by increasing order quantities for inventory replenishment. However, with increasing lead times, the risks of higher safety levels and larger order quantities are more substantial because demand forecasting is typically less accurate. …

Application of modified ZBB and inventory control system in small merchandising businesses

The present economic climate in Canada and particularly in Newfoundland has had crippling effects on small businesses. This is especially so in the case of those small businesses whose financial and management control systems are weak. This paper suggest a methodology to improve such control systems using a modified Zero Base Budgeting (ZBB) and inventory management process.

APPLICATION OF A MODIFIED ZBB AND INVENTORY CONTROL SYSTEM IN A SMALL MERCHANDISING BUSINESS

ABSTRACT The present economic climate in Canada and, particularly, in Newfoundland has had crippling effects on small businesses. This is especially so in the case of those small businesses whose financial and management control systems are weak. This paper suggests a methodology to improve such control systems using modified zero base budgeting (ZBB) and inventory management processes.

Equivalent Formulations of Inventory Control Problems

Abstract A general multi-item periodic-review inventory control problem is formulated in several ways, each reflecting a different point of view of the decision maker. These formulations are evaluated with respect to implementation criteria of: (i) technical difficulty in obtaining an optimal solution from the model, (ii) estimation effort required to find the values of the parameters in the model, (iii) effort needed to maintain the model continuously updated during the inventory management process. The most promising one is then compared with the conventional formulation, where the objective function is expressed as the sum of expected inventory holding and shortage costs. It is shown that both formulations lead to the same optimal solution under a certain budgetary constraint. This result offers an instrument for implementation improvements in inventory control systems.