Increasing Efficiency of Inventory Management: A Case Study of Air Conditioner Manufacturers

Abstract

The objectives of this research were to study the appropriate forecasting methods for the prediction of air conditioner demand and to study the inventory control policy for the management of air conditioner inventory. It is found that the customer forecasting order is based on the staff’s experience and determines the policy to control the electronics raw material causing too much or too little of raw material inventory. This research has studied the appropriate forecasting method of air conditioner demand by applying the Minitab program using the time series method. Then, the product value and uncertain demand condition are also applied to prioritize the electronics raw materials to select the important group of raw materials to formulate inventory management policies.

The result shows that the Winters’ method is the most suitable method for air conditioner demand forecasting due to the lowest forecasting error. As a result of raw material inventory prioritization, there are 20 items of the most important raw materials. The researcher then analyses Economic Order Quantity (EOQ), Safety Stock (SS), and Reorder point (ROP) from the raw material demand obtained from the forecasting by Winters’ method in 2020. Comparing the total cost incurred from this research with the current inventory management of the air conditioner manufacturer found that the total cost can be reduced by 308,669.22 Baht or 43.90 percent.