A Comparison of Inventory Strategies for a Manufacturer within the Air Conditioning Industry

Abstract

The present manuscript describes the application of two inventory strategies to optimize the supply process within an air conditioning manufacturing facility. These approaches were considered as the air conditioning industry involves variable demand patterns due to its large market (automotive, home, cooling/heating systems, among others). Because the components which are assembled in this factory involve 45 components which have different demand, lead times and inventory management costs, the strategies were adjusted to reduce costs and management complexity. First, inventory management costs were optimized according to the classification of the most important components. Then, periodic and continuous review models were adapted to optimize the management costs of these components. Validation of these strategy through discrete-event computer simulation led to determine their suitability for this case study, significantly reducing inventory management costs while increasing service level. Simulation also led to determine that for specific components, a model can lead to better (and feasible) results than the other and showing no stock-out events. This is an outcome which can be considered by companies to make a better evaluation of the supply strategies during the planning process.