Operations Research in Engineering and Technology Management
The automotive industry in Thailand is ranked 3rd in the world by commercial vehicle production statistics, following USA and China. With numbers like these, it is clear that the automotive industry makes up a large portion of the Thai economy. With such scale and impact, it is important for efficiency to be optimized. One way to reduce cost is to develop a model that will provide a viable and real optimization scenario in regards to logistics for an automotive parts company operating in Thailand. The current business practice has 5 branches of an auto parts company maintaining separate inventories in order to meet their own seasonal demand and reduce their lead times. This independent viewpoint misses an opportunity for increased efficiency and effectiveness by utilizing surplus inventory in certain branches to cover deficits in others. This missed opportunity impacts the company’s competitiveness. The goal of this project is to create the foundations of a tool to aid in the logistical decision making challenge of maintaining inventory between the 5 branches. This tool will be used to calculate the optimum purchasing strategy, using an EOQ calculation followed by a order distribution decision to reduce costs. The model we created is able to perform these calculations, and is able to arrive at optimized solutions in relatively short order. It is useful as a tool for investigating the outcome of different ordering strategies ahead of time. The model has far to go before it would be used in a production environment however. It will need to be able to take into account real world scenarios with all their uncertainty. This model could be expanded to support these situations.
Vannaprapa, Noppadon; Bottjen, Philip; Danskin, Rodney; Penmetsa, Srujana; and Lethlean, Joseph, "Optimization Modeling for Inventory Logistics" (2013). Engineering and Technology Management Student Projects. 405.