Inventory Optimization of Resources with Discounts in a Manufacturing Company

Abstract

This article is primarily concerned with the analysis of inventory control of items with price break in companies with particular reference to the Store, Purchasing and Production departments of the Nigerian Bottling Company (NBC). Inventory constitutes the most significant part of current assets of larger majority of Nigerian manufacturing industries. Inventory management has become highly developed to meet the rising challenges in most corporate entities and this is in response to the fact that inventory is an asset of distinct feature. Because of the relative largeness of inventories maintained by most firms, a considerable sum of an organization’s fund is being committed to them. The main objective of this study is the application of quantity discount model as an existing tool of optimization in inventory management. The answer to the fundamental question of how best an organization which handles inventory can be efficiently run is provided for in the analysis and findings of the study The optimal solutions were obtained and compared with the existing inventory policy of Nigerian Bottling Company to determine their relative benefits. Data were analyzed using MATLAB optimization software to solve the model. The results of model application suggest that improvement in the company inventory planning situation can be realized if such planning model is adopted. Consequently, recommendations to meet the demands of customers, hedge against price increase, protect against stock-outs and most of all smooth production costs conclude the research study.