Inventory Cost Model And Optimization Of Raw Material Yard In Iron And Steel Enterprise

Cost, as an important index that directly reflect the input and output, is a principal symbolto evaluate enterprises’ production and operation status, and is also the important standard tomeasure the competitiveness of an enterprise. At present, the iron and steel industry is in ahigh-cost and meager-profit state, and the raw material yard is an important part of the "ThirdProfit Headspring". Under the circumstance, how to reduce cost, especially the raw material yardinventory cost has become the key to enhance the competition ability of enterprises. Therefore,on the basis of analyzing the national and international studies, this paper uses the systemthinking method emphasized by System Dynamics to discuss the formation mechanism andoptimization strategies of raw material yard inventory cost in iron and steel enterprise. Thefollowing study contents of this paper can be included:Firstly, for the present situation of raw material yard in iron and steel enterprise, theinscapes and features of the raw material yard inventory cost system and the interactionsbetween the components of system are analyzed in detail. Secondly, a System Dynamics modelof the raw material yard inventory cost is established, which include inventory carrying cost,transportation cost and shortage cost. Thirdly, Vensim PLE software is used to verify the validityand stability of the model, then the model is simulated by using the Vensim PLE function of"strategy and tactics laboratory". Finally, according to the simulation results, the paper proposesan effective way to reduce inventory carrying cost from two aspects, namely risk cost andoperation cost by adopting the AHP and0-1integer programming method.The results show that the inventory carrying cost is the key factor of the total inventory cost.Compared with other costs in the inventory carrying cost, the variation tendencies of opportunitycost and risk cost are similarly with the inventory carrying cost, moreover, they are in higherproportion. The transportation cost changes obviously, but there is no great impact on the totalinventory cost.