Reducing the Inventory Cost of Full-Service Chain Store Coffee Shops

Abstract

The purpose of this research was twofold: 1) to investigate the reduction of storage costs for raw materials used in the production of beverages in full service chain store coffee shops, and 2) to compare and propose improvements to reduce storage costs and improve inventory management policies to solve the problems of high storage costs, insufficient storage, and insufficient raw materials relative to production needs. The study applied an analytical problem-solving approach to identify the causes of the problem of inventory quantity not matching demand. Five major commodities were selected for analysis as top priority due to their urgent need and significant problem. For the data analysis, the classification system ABC was used, which follows the principles of grouping. Then, the program Minitab (Education Version) was used for forecasting and Microsoft Excel was used, for analysis to collect data on raw material consumption in the production of beverages in full service chain store coffee shops from January 2020 to December 2022, and to determine the reorder point. The research results showed that implementing the new policy of ordering replenishments at the reorder point (ROP) until an appropriate level was reached resulted in a cost reduction of 31,963.65 baht per year, which is equivalent to a 41.58% reduction in total inventory cost for all Type A raw material. Comparing this approach with the old inventory management policy, its effect can be extended to other product categories. The identified reorder point and optimal order quantities derived from this study can serve as starting conditions for improving the efficiency of inventory management strategies.