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Inventory management and cost efficiency:A case study in medical devices distributor

Author

Listed:
  • Andan Anjani

    (School of Business and Management, Institut Teknologi Bandung, Indonesia)

  • Adirizal Nizar

    (School of Business and Management, Institut Teknologi Bandung, Indonesia)

Abstract

This research aims to observe current inventory management applied by one of the medical equipment distributors specializing in eye health devices, and provide recommendations for an optimal inventory management system to achieve cost efficiency afterward. The method used in this research is quantitative, focusing on processing and analyzing numerical data obtained from the company to calculate safety stock and the number of orders. In addition, ABC classification is also used in data processing to group items based on their value. Items belonging to class A (having a value of 80% for the company) will be used in the data processing. The next step is to conduct forecasting simulations for demand forecasts. The results of the forecast will be used for calculating the safety stock and order quantity. The output from the results of data processing and analysis in this study shows 67 items included in class A, which will then be processed using Minitab software for forecasting. Based on comparing the four forecasting methods, the one with the lowest error value is Trend Analysis. If the company can apply the storage method according to the fixed-time period model calculation, there is a potential savings of US $ 717,133 or 63% of the total overstock Key Words: ABC Classification, Forecasting, Inventory Management, Fixed-time Period Model

Suggested Citation

  • Andan Anjani & Adirizal Nizar, 2021. "Inventory management and cost efficiency:A case study in medical devices distributor," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(2), pages 217-227, March.
    • Handle: RePEc:rbs:ijbrss:v:10:y:2021:i:2:p:217-227
    DOI: 10.20525/ijrbs.v10i2.1042
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    References listed on IDEAS

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    1. Millstein, Mitchell A. & Yang, Liu & Li, Haitao, 2014. "Optimizing ABC inventory grouping decisions," International Journal of Production Economics, Elsevier, vol. 148(C), pages 71-80.
    2. Gonçalves, João N.C. & Sameiro Carvalho, M. & Cortez, Paulo, 2020. "Operations research models and methods for safety stock determination: A review," Operations Research Perspectives, Elsevier, vol. 7(C).
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