Inventory management practices and their implications on perceived planning performance

Research output: Contribution to journalArticle

Abstract

This paper focuses on the use of material planning methods to control material flow to inventories of purchased items. The first sub-objective is to evaluate the perceived planning performance of material planning methods used to control material flows in different inventory types in manufacturing and distribution companies. The second sub-objective is to evaluate the difference in perceived planning performance depending on the way planning parameters are determined and the methods used. Five material planning methods are studied: the re-order point method, the fixed order interval method, run-out time planning, Kanban and MRP. Our analysis is based on survey data from 153 manufacturing and 53 distribution companies. Findings conclude that the use of material planning methods differs depending on where along the material flow they are applied, whether the inventory is located in manufacturing or in distribution operations and between companies of various sizes. The modes of applying a material planning method affect its perceived performance. In particular, the way of determining and the review frequency of safety stocks and lead times have great importance for the planning performance of MRP methods, while the determination and review of order points, review frequencies and run-out times were important for re-order point methods.

Details

Authors
  • P. Jonsson
  • Stig-Arne Mattsson
Organisations
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Transport Systems and Logistics

Keywords

  • performance, re-order point, materials requirements planning, planning parameters, inventory management, planning environment
Original languageEnglish
Pages (from-to)1787-1812
JournalInternational Journal of Production Research
Volume46
Issue number7
Publication statusPublished - 2008
Publication categoryResearch
Peer-reviewedYes