An Application of an (R, S) Inventory Management Model for a Construction Materials Manufacturing Company by Using Simulation

Abstract

Globalization has motivated companies to develop competitive strategies in today's business environment. In this context, they lead them to review their costs. When the cost items are analyzed, the most critical point that will give an advantage to companies in terms of cost is that companies healthily manage their inventory. Inventory management is of vital importance as the companies have a significant percentage in terms of cost and ensure that the customer demands are met in a timely and sufficient manner. This study focuses on the problems of the company's inventory control decisions that ensure balanced and minimum costs through effective inventory management. In this study, one-year data on demand, consumption, and inventory of a company that uses traditional methods including semi-finished products are considered. Since the demand is not known precisely and it is probabilistic, we apply the (R, S) inventory control model. We use simulation as a stochastic methodology to determine the inventory level of the construction company under consideration. As a result of the study, after comparing the actual data in the current system with the developed model we apply, it is observed that the cost reduction and its use provided additional benefits to the company.