Inventory Optimization in Manufacturing Organizations

Abstract

This research consist of a generic Stochastic Replenishment Model that will help to manage the inventory stock optimistically to avoid stock out situation. The research also proposes MRP (Material Requirement Planning) desktop application that will keep tract of raw materials being used in the manufacturing final product and ensure smooth manufacturing to avoid uncertain delays in the deliveries of final product. Stock is a critical resource in most assembling organizations, and productive utilization of stock positively affects the organization's income and proceeded with reasonability. For this purpose normal distribution is used to provide a prediction of upcoming orders and required raw material to complete the order. This will make the results more authentic. Proposed model will save the organization from stock out situation and over production by optimistically managing the repositories. Repositories are unrefined materials, work-in-process stock and completely finished items. Along with the stochastic model Material Requirement Planning is provided to further schedule the inventory items for efficient delivery of final product. Material Requirement Planning provides schedule for re-stocking raw materials in accordance with projected requirement, lead time and safety stock.