Dynamic Demand Inventory Control System

By

Supamas Viriyanusorn

Jitrayut Junnapart

Background

Inventory level of raw material is very important to operational of a manufacturing firm, it must be kept and monitored very well. Inventory control system can make this job easier.

Concept of Inventory Control

There are three main kinds of inventory models:

1.Economic Order Quantity (EOQ) model

2.Economic Production Lot-Size model

3.Inventory model with Planned Shortage

Economic Order Quantity model

Economic Order Quantity (EOQ) that the shortage of raw material is not allowed will be applied in this project

Concept of Inventory Control

It is very important that the order is placed at the right time and for the right quantity.

Too large ordering quantity and the part is used up too slow increase carrying cost while too few ordering quantity will create high ordering cost (telephone, fax, etc.) because that must be done very often.

Economic Ordering Quantity

Both reorder point and quantity can be calculate as:

Qor = (dmd) x (Lt) and

Qopt = (2CoD/Cc)1/2 Where Qor : Reorder point

Qopt : Optimum Ordering Quantity

dmd : Demand per day

Lt : Lead time (day)

Co : Ordering Cost per time

Cc : Carrying Cost per unit per day

Economic Ordering Quantity

Reorder point and quantity

Economic Ordering Quantity

The most important point is to track changing demand of each item in the system by monitoring time and quantity that each item is withdrawn. This withdrawal time and quantity can be used to calculate the current demand.

Economic Ordering Quantity

1. File system: There are 2 main file types in this project

– Inventory data files – Part index file

Computer Program Development

- Inventory data file: Each inventory has its own data file. There are 8 attributes that represent detail for each item

• Part name • Quantity• Demand or usage rate• Lead time

• Order Cost per time• Carrying Cost • Time having the Quantity• Status of the item

Computer Program Development

- Part index file: A single file that contains current active part numbers in the system. The content of part index file is the name list of active inventory number.

Computer Program Development

There are 9 functions of program:

1. List up part

This is the function that let the user know what part are in the system.

2. Add new part into system

This function is for adding new inventory item to the system.

Computer Program Development

9 functions of program (continued):

3. Calculate

This function is for calculate data in the program.

4. Withdrawal part

This function is for user to withdraw inventory item from the system.

Computer Program Development

9 functions of program (continued):

5. Update for part ordered

This function is for update data when reordering has been made for items.

6. Fill up inventory

This function is for user to fill up the material when reordered parts arrive at storage area.

Computer Program Development

9 functions of program (continued):

7. Overwrite Part Data

This function is an engineering than user’s function. It must be used with care.

8. Remove Part

Once an item will not be used anymore, this function will be invoked to remove the part from the system.

Computer Program Development

9 functions of program (continued):

9. Exit

This is used to exit from the program without perform any action

Computer Program Development

After complete the program coding and preliminary test, the system is entered with inventory data. The program uses text menu to interface with users.

Main menu of program has 9 choices to select. They are:

Implementation

1.List up part

To list up all the parts in system. Output types can be chosen

Parts list up

Implementation

Add new part into system

2. Add new part into system

A new part can be added into the system using this function

Implementation

Calculate for reordering and quantity

3.Calculate

Option 3 performs calculation, then informs user items and quantity that are needed to reorder.

Implementation

Withdrawal part

4.Withdrawal part

When item is pulled out from store, this function cuts the remaining quantity from system

Implementation

After withdrawal

Quantity of part number 2 reduces to 280

4.Withdrawal part (continued)

Implementation

Update part ordered

5. Update for part ordered

Option 5 is for update to the system that an item has been reordered.

Implementation

Fill up inventory

For part number 2 of 148 units

6. Fill up inventory

Adjust quantity of part in the system once the order is delivered.

Implementation

Quantity of part 2 after fill up

The part’s quantity increase to 428 units

6. Fill up inventory (continued)Implementation

Overwrite part data

7. Overwrite part’s data

This option is an engineering function than user function. It should be used with care.

Implementation

Part Removal

8. Remove part

Option 8 removes part from the system in case that the part is not used anymore.

Implementation

9.Exit

This function is provided for the case that user wants to quit from the program without doing any function.

Implementation

Conclusions

Inventory control can be done very well with help from computer programming. The program from this project can accept and build data files for each inventory item. The data file records name of the part, quantity, current demand, ordering lead-time, ordering cost, carrying cost, time having that quantity, and status of the item. The program recalculates for demand and can well inform user to order part with most economical ordering quantity.