IMPROVING THE INVENTORY POLICY OF A LOCAL BUSINESS IN NORTH CAROLINA

This study is based on an inventory problem of a local sauce distributor, which is based in North Carolina and having high costs due to excess inventory, high inventory turnaround time, inaccurate forecasts, and small... [ view full abstract ]

This study is based on an inventory problem of a local sauce distributor, which is based in North Carolina and having high costs due to excess inventory, high inventory turnaround time, inaccurate forecasts, and small production lot sizes. As in every business, the proper utilization of inventory with maximum service level have been unattainable success factors for this local company as well. It is important to ensure that inventory is effectively being used and, particularly with perishable items, products are not being wasted. Our objective is to provide quick solution that will help the management accurately process orders and anticipate the amount of sales per month to be able to best handle the demand. We reviewed four years of historical sales and inventory data, analyzed the trends, and developed forecasts with the goal to advise the client on best practices for inventory planning going forward. We developed a new inventory policy to reduce total costs and inventory stock keeping time. After implementing the results, the management was able to see a quantified analysis of the shortcomings in their current forecasting method and gained good insights through the information analyzed to understand the shortcomings in their current inventory policy. They adapted the seasonality with trend forecasting model for future sales of all their flavors. The biggest economic benefit for the company was the insight the management has gained regarding the impact of business analytics.