Research On Raw Material Inventory Management Of A Manufacturing Firm

Manufacturing industry is a very important part in Chinese economy. At present, under the influence of economic globalization and financial crisis, competition has been becoming fiercer and fiercer among the manufacturing firms. It is necessary to keep proper raw material stock in order to increase the enterprise's competence. However, high inventory level will lead to massive inventory cost. In 2008, D company's inventory burden was much higher than the financial budget. Finding a method to control the inventory is an urgent task for D company. This thesis tries to do some work along this line.In the thesis, we first investigate the present situation of raw material inventory and identify the influence factors of the inventory. We find that sales forecast, which is the base of ordering, plays an important role in irrational inventory. Generally, it is higher than the actual demand. The lead time of raw material for D company is longer than that of finished products, leading to wider fluctuation and sharp increase in inventory level. Due to the influence of technical, maintenance and production problems, production efficiency is lower than the technical standard, as a result, the raw material consumption is lower than expected.Based on the above analyses, the thesis introduces the methods for the inventory control, namely, reducing requirement uncertainty by correcting sales forecast, estimating and improving production capacity, shortening raw material lead time by dual sourcing.The research made in the thesis finds a set of workable solution to reduce inventory level as well as provides new methods for inventory management and solution of inventory problem so that the relative theories can be enriched.