Inventory reduction using the optimal policy curve approach: a case study Online publication date: Tue, 24-Sep-2019
by Omkar Kaushik; Saket Jha; Shikha Kashyap; Ravindra Ojha
International Journal of Productivity and Quality Management (IJPQM), Vol. 28, No. 1, 2019
Abstract: The current trends in Indian automotive manufacturing industry indicate a rapidly increasing socio-technical complexity of its manufacturing systems. The industry is striving to meet the ever-changing behaviour of the market demand. This has led to considerable increase in variety of products manufactured under one roof. Increasing variety requires high attention to control the high inventory levels of parts and aggregates. This paper focuses on understanding and analysing causes of high inventory levels of a leading tier-I automotive supplier and recommending the way forward using a structured methodology. The quality control (QC) tools, the economic order quantity (EOQ) and the optimal-policy curve (exchange curve) approach have been utilised effectively to funnel the key issues and finally optimise the inventory level of the key parts. The application of the QC tools and the optima-policy curve approach has resulted in a healthy 25% reduction of the high inventory in the industry under taken as a case study.
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