Continuous review model to control inventory level associated with independent demand: A case study of Bosch Vietnam

Abstract

Nowadays, inventory system has played a major role in shaping the success of the company, especially in manufacturing sector. As the plant increases the capacity up to 10% next year, the total cost of inventory associated with production must be reduced as well as inventory quantity are exactly calculated to satisfy daily demand. Right now, Bosch is dealing with the significantly rising total cost up to 105,000 euros in the last 24 weeks and struggling to reduce them. There are two primary reasons for high total costs including high inventory amount and inaccurate forecasting. Therefore, this paper mainly discusses the new mathematical model using just-in-time system. This model involves the capacity of assembly line as well as the production storage and warehouse to supply the parts (elements, loops and push-belts). Moreover, this model’s objectives are to reduce the total costs down to at least 10-20% and inventory amount at least 10% as well. Furthermore, the demand forecasting techniques will be discussed in order to find the appropriate ones instead of using moving average and exponential smoothing. Regarding the data collection, a sample of 24 weeks with 3 item types is applied to apply in the mathematical model and demand forecasting techniques which brings out the feasible solutions. Keywords: pull system, just-in-time system, inventory level, independent demand, production line