Inventory management support system for home decoration business

Abstract

This research aims to propose an effective inventory Management policy for home decor businesses, with a focus on a specific study case. The business being studied sold home decor items at its physical stores, each of which came with its own selling and marketing techniques. As marble items were unique in their own way, coupled with the unpredictable needs, they were usually displayed at the stores in large numbers to avoid the loss of sales opportunity - which in turn resulted in overstocking.  In this study, a new method was proposed to improve the company’s inventory policy, making it more systemic and better organized. Results from the proposed inventory policy were estimated using the order-up-to level (OUL) model. The order intervals were set at two and four weeks, and given the optimal order quantity (Q*), 99.90% cycle service level, and the fixed lead time of one week - the analysis was made with factors such as limitations and selling methods of each of the stores, as well as the unpredictable needs for the home decor items, all being taken into account.  The proposed inventory policy was tested using a simulation model to make comparisons with the actual demand for such items between January and April 2021. Findings show that the average inventory could be cut down by no less than 50% and the cycle service level was still able to reach 99.90% as expected.