REDUCING INVENTORY HOLDING COSTS FOR CONSUMABLE ITEMS IN A LARGE STEELWORKS

A.R. Adams, D. Petrarolo

Abstract


The study in this paper involved a spare parts inventory system at a large steelworks. The inventory consi sted of over 38 000 different items that were required for the day-to-day operation of the plant. To provide an efficient service to various work centres, management had to ensure an acceptable service level of spare parts inventory at minimum cost. An inventory cost area of concern was excess holding costs and possible consequent overstocking. The study reported presents a strategy and a model for dealing with excess holding costs. An inventory model was formulated and implemented to reduce inflated stock levels for certain lines . Because of the study reductions in inventory holding were noticeable with targeted reductions of a minimum of SA Rand 2 000 000 in the first year.

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DOI: https://doi.org/10.7166/7-1-406

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