The Presentation of a Mathematical Model to Assess and Control the Inventory Control System through ABC Analysis Approach (A Case Study of Lino Meat Products Company)

Document Type: Research Paper

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Abstract

Today, the effective inventory management plays an important role in the success of the organizations in the new business environment. It is not clearly possible for the organizations that store hundreds of inventory items to economically design an inventory management policy for each inventory item separately. Moreover, various inventory items may play quite different roles in the business of the organization. Hence, the managers need to classify these items in order to control each inventory category properly based on its importance rating. This research is composed of the following sections: In the first section, the criteria affecting the evaluation of the inventory control system of the studied factory and the priority of each one of them will be identified, in the second section, the priority of each criterion in each inventory category (A, B, C) is calculated using the analytical hierarchy process, in the third section, a mathematical model will be presented to evaluate the inventory control system using the regression, in the fourth section, based on the categories defined for inventory items; the model sensitivity analysis is used to determine the significance of each criterion for each inventory category. The overall result obtained from this study shows that by entering any new inventory to the inventory control system of the studied factory, the inventory control managers will be able to determine the importance of each identified criteria affecting that inventory by using a presented mathematical model, which will improve the inventory control system.

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