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Increasing the inventory turnover rate by looking at order quantities and safety buffers - conducted at UniCarriers Manufacturing Sweden AB

Laban Cramér ; Mikael Lakso
Göteborg : Chalmers tekniska högskola, 2014. 53 s. Master thesis. E - Department of Technology Management and Economics, Chalmers University of Technology, Göteborg, Sweden; E2014:046, 2014.
[Examensarbete på avancerad nivå]

The purpose of this thesis has been to understand how to improve the inventory turnover rate for an MTO-company in a purchasing and logistics perspective. With emphasis on lot sizing methods and different approaches of how to calibrate safety buffers, the inventory turnover rate measure’s denominator: the value of average inventory has been in focus. The research was built around UniCarriers Manufacturing Sweden AB’s purchasing and logistics division and its operations in the beginning of 2014. The inventory turnover rate is a key performance indicator within procurement for most manufacturing companies at the same time as procurement activities get increasingly important. The insights from the research are thus believed to be valuable for any MTO-company managing a large number of purchase articles. The report is divided into a literature framework, a part describing empirical findings at UniCarriers Manufacturing Sweden AB and an analysis part that elaborates on the theoretical and empirical findings. The report ends with a discussion and conclusion part where final recommendations are presented. By introducing economic order quantity to generate article specific order quantities, each article’s average inventory would according to simulations be reduced. As the other core area for improvement, a redefined ABC-matrix that generates fill rates to determine safety buffers has been introduced. Volume value is an inventory policy measure that is directly connected to the inventory turnover rate. By only using the volume value, the service level towards production would increase and the employed capital in inventory would be reduced in the long term. The suggested proposals concerning the two core areas, lot sizing and safety buffer, do not constitute the full improvement potential. Therefore other factors were investigated to find additional improvement potentials.

Nyckelord: ABC classification, inventory turnover rate, lot sizing, safety stock, safety time, service levels

Publikationen registrerades 2014-06-16. Den ändrades senast 2014-10-15

CPL ID: 199239

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