Development of a Rework-Based Inventory Policy for Ordering Water Sports Equipment Bags: A Case Study of a Manufacturing Packaging Department

Abstract

Inventory management plays a critical role in reducing operational costs and maintaining efficiency in competitive manufacturing environments. In the production of water sports equipment, packaging bags are essential supporting materials; however, the absence of structured ordering policies often leads to uncontrolled purchasing, excessive inventory, and increased sunk costs. This study aims to develop an improved inventory policy for packaging bags by comparing three ordering approaches: the Traditional Ordering Method, the Fixed Time Period System (FTPS), and a proposed rework-based inventory policy that incorporates rework rate and rework time into inventory planning. The research was conducted at a water sports equipment manufacturing company in Chonburi, Thailand, focusing on eleven models of packaging bags used in the packaging process. Production and inventory data were collected over three months, and the performance of each ordering method was evaluated based on average inventory level, sunk cost, and service reliability. The results indicate that the Traditional Ordering Method generated the highest inventory cost of 353,307 Baht due to excessive overstocking. The FTPS approach, which applies periodic review and safety stock principles, reduced inventory costs to 200,691 Baht and improved stock control, although inventory levels remained higher than actual demand. In contrast, the proposed rework-based inventory policy achieved the lowest average cost of 57,209 Baht by incorporating production variability through defect rates and rework cycle times. This method reduced costs by approximately 300,000 Baht compared with the traditional method and by 146,000 Baht compared with FTPS, while preventing stockouts during the observation period. These findings demonstrate that integrating rework-related variability into inventory planning can significantly improve cost efficiency and operational reliability. The study contributes to the inventory management literature by bridging theoretical inventory models with practical industrial implementation and by highlighting the potential of rework-sensitive policies as an effective framework for managing packaging materials in manufacturing systems.