Multi-Criteria Inventory Optimisation of University of Ibadan, Ibadan, Nigeria’s Bakery Using Goal Programming Approach and Flour as the Major Raw-Material

Abstract

Asides inventory cost, which is being used as the only inventory performance measure at the University of Ibadan bakery, a number of other criteria, such as inventory cost, service level, inventory turnover and delivery lead time which influence the performance of an inventory system have surfaced over the years. Hence, there is the need to examine all these criteria-objectives altogether. Therefore, this research was centred towards optimising the inventory system of University of Ibadan bakery, putting multiple criteria into consideration. Data on 17 raw materials: their costs, suppliers, usage rate, lead time, storage space and available capital were collected by means of interviews, past records and observations. The weighted goal program algorithm was adopted to find the best compromise between fulfilling the four objectives by minimising the sum of the deviation from the target values of the goals. Subsequently, Lingo 17.0 and Tora 1.0 optimisation software packages were used to solve and compare the model generated, while putting into consideration storage space constraint and budgeted capital. The developed model from the goal programming algorithm exhibited four goals (combined into one objective function). Same solutions were obtained from Lingo 17.0 and Tora 1.0. While Lingo 17.0 gave a  uniform service level of 100% , a  turnover ratio greater than 1(>1) for all the materials at a negligible increase (of  < 0.0001%) in total inventory cost of the raw materials and available lead time duration of zero days (< 24 hours) for each material, Tora 1.0  gave a  uniform service level of 100% , a  turnover ratio greater than 1 (> 1) for all the materials at a negligible increase (of  < 0.0001%) in total inventory cost of the raw materials and available lead time duration of zero days (< 24 hours) for each material. Implementation of the developed model will eliminate unnecessary waiting time between production, thereby ensuring effective and efficient utilisation of raw materials in production which will lead to reduced cost of holding inventory, elimination of unnecessary overall cost and wastages, and also improvement of the productivity and profit on the long run.