Inventory control for slow-moving items with application to real data

Inventory is material held in storage for later sale or use and it may consist of raw materials, in-process goods, and finished goods. Inventory control of goods is a common problem to all enterprises because for most firms, inventories account for a large percentage of working capital. The purpose of inventory management is to have the appropriate amounts of inventory at the right time, and at low cost.Slow-moving stocks can be defined as the products whose average demand in the lead time is below ten units and which are expensive products. The demand of the slow-moving stocks has a discrete distribution whose values is mostly zero, so assessing good strategies for the management of these stocks is not easy. Because of being stochastic and lumpy demands, the forecasting of the lead time demand distribution is very difficult, which is essential to obtain the control parameters of most inventory policies.In this study, principally, it is applied ABC classification to select important units for the enterprise and detection of the products about their being ?slow-moving or not? is made by using real data. For defining the decision variables of the slow moving stocks, the methods for estimating the intermittent demand are needed and these forecasting techniques are implemented. In order to evaluate the sensitivity of the forecasting methods, the values of the total cost and the realized customer service levels are constructed. Then, the re-order points and the order quantity which satisfying the target customer service level of the firm was found. By using these values, optimal inventory policy was improved for the firm by being used continuous review inventory model.