Development of an Inventory Management Strategy to Determine Stock Levels and Service Levels for COTECMAR
Portocarrero, Luis Villegas
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The main objective of this research is to determine the best approach for managing inventory at COTECMAR, a shipyard in the Colombian Navy. The distinct nature of demand for items required in building and repair of ships, the uncertainty surrounding the repair needs, and the broad range of customers being served make managing inventory at a shipyard uniquely challenging. The project started with a review of selected inventory management strategies and theories. Thereafter, we identified a small sample of items, collected demand data for these items, and analyzed that data to better understand the drivers of demand. We concluded that (1) the items needed in shipbuilding and other special projects are dependent demand items that are better managed through Materials Requirements Planning (MRP) approach, and (2) the items needed in repairs are independent demand items better managed through the Economic Order Quantity (EOQ) approach. Accordingly, we collected and analyzed additional data, such as cost factors, to perform the necessary EOQ and service level calculations for selected items to illustrate the methodology we propose in this research. We conclude the paper with several specific recommendations for the management at COTECMAR and provide suggestions for carrying out future research.
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