Explore the Inventory Problem in a System Point of View: A Lot Sizing Policy

This article presents a study on the make-to-order inventory management problem in an anonymous manufacturer which produces precision screw and bolt for European customers. Seeing that this company keeps about 800 active wide varieties of screw and bolt items, of which the manufacturing normally undergoes six processing steps each requires 1–4 h setup before production proceeds, the company is forced to keep inventory-item in their make-to-order production. In this clear and certain inventory problem setting, we can make a study from system point of view to effectively reduce the inventory and meet customers’ requirements. Although the operations of business are preceded by the operation mechanism, it is easily found that we still can enhance inventory performance by some control factors such as lot-size policies and parameters. To facilitate the study we develop a system simulator according to the company’s SOP as the tool to visualize the inventory problem then achieve effective management.