Optimization of an inventory system of an auto parts company

• Main Authors: Cabal, Ma. Kristina P., Chua, Maria Rufina R.
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Inventory control; Auto Parts Company (Philippines)—Inventory control; Automobile supplies industry > Inventory control; Mathematics
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/5073
• Institution: De La Salle University

The objective of this research study is to determine the optimal inventory policy for the Auto Parts Company so that the minimum total cost can be achieved while satisfying all the demands. The Economic Order Quantity (EOQ) model and the Dynamic Programming (DP) technique were applied. In the EOQ model, different models were considered based on the absence and presence of shortages, and presence of quantity discounts. With DP, the particular technique used was the general periodic review inventory model for deterministic demands. The researchers then applied these methods to the Auto Parts Company with a problem regarding their inventory. A feasibility study was conducted on which method is better and gave a lower inventory cost. The EOQ model with no shortages permitted gave the lowest inventory cost compared to the inventory costs from the EOQ model with shortages permitted and the DP approaches. Hence, the EOQ model with no shortages permitted gives a better optimal policy for the inventory of the Auto Parts Company.