Behavioural inventory management: a new approach to inventory classification based on stock-induced consumption index

This paper presents an analysis of exploratory survey conducted to investigate the consumers' perception by using the instrument of structured questionnaire about stock-induced consumption of various commodities which would invariably result in resource wastage. The intended outcome of this survey is to find out the stock-induced consumption index of these commodities which exhibit behavioural tendencies of different consumers. This would eventually be used by inventory control practitioners to estimate the shape parameter (β) of these commodities because parameter estimation is identified as the major limitation resulting in poor applicability of the stock-dependent demand inventory models. In addition, this paper attempts to classify these commodities on the basis of their high, medium and low potential for stock-induced consumption (HML analysis) to facilitate use of resources to their maximum efficiency by concentrating on items having the greatest potential for wasteful consumption. Perishability is considered as one of the driving forces in stock-induced consumption and an attempt is made to establish a relationship between perishability of these commodities and their stock-induced consumption. The individual consumer behaviour influences the waste caused by stock-induced consumption and the paper proposes to bring in behavioural inventory management in managing material waste.