CASE: INVENTORY
MANAGEMENT
Optware
Solutions was selected by a hardwood plywood company with operations throughout
North America to help optimize the purchase of veneers and management of
veneer inventories. In this business the company buys veneers in mixes,
resorts them and then sends them on to the appropriate manufacturing plants or
warehouses.
Optware Solutions provided a decision
support framework that includes statistical analysis, forecasting techniques
and the optimization power of linear programming. The multiple-time period
model recognizes the sequential nature of time. It includes vendor-specific
veneer sources and inventories and other elements of day-to-day
operations and provides insight as to how to reduce costs and operate more
efficiently.
The majority of the data for this
application is extracted from existing data systems. The extracted data
includes: graded inventory, crated inventory, on-order veneers, and
vendor-specific yields and sales history. The data is stored in a "data
warehouse" created within an ODBC database.
The raw data in the database is
processed by the preprocessing module to generate appropriate data for the
planning function. The sales history is passed to the forecast module. The
forecast module utilizes the historical data to perform statistical analyses
and generate a veneer demand forecast.
The veneer demand forecast is
combined with relevant vendor data, inventory data and safety stock
data to determine the optimum procurement solution. The model solution reports
provide the user with a "road map" of actions to be taken in the
management environment.
By use of this tool the client was able
to reduce inventories by approximately 50% which resulted in a large reduction
in capital requirements.
