Track: Inventory Management

Abstract

In a global market scenario inventory is one of the most significant possessions in a manufacturing trade. ABC analysis is a technique for inventory categorization which is most extensively used in manufacturing industries. The aim of this research is to deal with assignment of minimizing excess inventory by means of ABC classification and forecasting technique in a medium scale manufacturing industry. The main reason for the excess inventory is due to not following proper forecasting technique based on their original demand. The forecasting technique is used by simple moving average method for the previous three months production which leads excess inventory. This excess inventory is in the form of raw material, work in process, semi-finished product and finished product. Initially, the products need to be classified for inventory optimization and inventory forecasting. In this study ABC classification was used for optimizing the inventory level of the industry. Forecasting error time series method based on actual demand was used for predicting the future demand for reducing the current inventory level. From the results it was observed that, the percentage of forecasting error in actual demand and future prediction was reduced to 15.6%.