The Difficulties Faced By The Hard-line Group Of Raw Materials Safety Stock And To Resolve Path

Tungsten market has been a seller's market since 2005.Tungsten suppliers manipulated the prices based on the demand and inventory changes of carbide enterprises. The industry profit transfered from downstream to upstream industries. Lossing the right to decide the Tungsten price, Zhuzhou Cemented Carbide Group Corp. Ltd(ZCCGC) and other hard carbide enterprises are operating with a lot of decision-making errors In recent years. Safe stock issue becomes the major issue related to the survival of the ZCCGC.Lots of inventory issues focused on economic stock and the quantity uncertainly safety stock. The study of safe stock with price uncertainty is not yet fully. In the long term, the supply and the demand common decide the equilibrium price of raw materials, the impact of the inventory on market prices is not significant. But in the short term, the gap of the actual inventory and safety stocks decides the price elasticity. Price elasticity also affects the size of the fluctuations in prices of raw materials. The purchase price adjustments the cost of inventory, thus affecting profits. Inventory becomes a major factor of the enterprise's production operations security.ZCCGC inventory of raw materials has a significant impact on Tungsten domestic market prices. Since in a seller's market, if Tungsten prices become higher, ZCCGC can only purchase at high prices, because of the small and the less actual inventory. Therefore, the predicament of company is how to increase the price elasticity of raw materials.There are two paths to solve the problem. First, increase actual inventory levels, second, lower the safe stock level. From the reality of the company, the second path is more workable. Specific methods are the following three: 1.Sorting the Tungsten inventory by ABC classification.2. Adopting the strategy of batches availability.3.Modifying and improving the existing inventory of enterprise scheduling system.