Track: Inventory Control and Management

Abstract

Spare part inventory contributes significantly to the overall inventory cost of the company. Spare part inventory is needed to support the maintenance process in order to maintain the reliability of the production facility. Quite often burden from spare part inventory is getting more severe when users are located in various sites and the users wanted higher service levels. This paper addresses the problem of shadow warehouses created by users in order to obtain a higher service level. The company currently has 44 shadow warehouses. The aim is to reduce those warehouses and then attempt to centralize the control of inventory by using (Min, Max) inventory control model. The stock parameters adjustment as per the result of the Min-Max inventory control model will increase the service level of criticality B up to 91% and criticality C up to 88%. Hence, the cost reduction of inventory value is USD 199,644.02 for fast-moving material and USD 43,210.82 for medium moving material.