Inventory Control in an Elastic Knitting Factory

Abstract

This study is to improve the performance of raw material inventory control because the casestudy did not have appropriate purchasing and inventory control policy. It led to having purchasingcost high up to 88.98% of total inventory cost. ABC Analysis was applied to prioritize the rawmaterials. The Economic Order Quantity (EOQ) and Silver-Meal heuristic were then selected tocalculate for economic purchasing quantity. Purchasing quantity, reorder point and safety stock werealso taken into account. Both single item ordering system and joint item ordering system were utilizedwith 95% service level. From our study, it was found that joint item ordering system with Silver-Mealheuristic was recommended because it provided minimum total inventory cost. From the 2003 record,the total inventory cost is 202,006.16 Baht. If our recommend technique were applied, the totalinventory cost would be 78,863.47. Therefore, using our technique, the total cost could reduced by123,142.69 Baht or 60.96% comparing to the case studyûs record.

Keywords : Inventory Control / Economic Order Quantity / Silver-Meal Heuristic