Developing Ordering Policy based on Multiple Inventory Classification Schemes

Abstract

Abstract Various inventory related decisions are made in industry, specifically in the manufacturing sector. One of the most critical and crucial decisions is development of ordering policies. Usually the ordering policy decisions are made based on a classification scheme (like ABC Analysis). This paper attempts to look at the problems of inventory control, specifically the ordering policy from a broader perspective for input materials like raw/packing materials and/or components. Here we consider multiple classification schemes in order to enable the decision maker to make a conscious and holistic decision. These schemes are assigned proper weights, considering the organizational vision and mission. The proposed approach is formulated in its simplest form by using a multi-criteria decision making (MCDM) technique called Simple Additive Weighting (SAW) method. In this paper, we explain the developed methodology along with an illustration. We propose the approach or methodology with no specific industry in mind, and hope this will help practicing manager, working in any business vertical.

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