Inventory Classification with Limitations in the Number of Changeovers and Space for Inventory

This research addresses an inventory classification problem in a company that manufactures plastic pallets. Classification of the inventory is difficult because it is subject to two restrictions: the number of changeovers and the size of inventory storage. A mathematical model is first proposed to maximize the fill rate by classifying all product items into four groups. Due to all items can be classified based on the monthly demand, in descending order. The present study then proposed a procedure to find the classification that is most efficient. According to the experimental results, the maximum fill rate in the current situation is 89.85%. The proposed methodology also tested different production batches and levels of demand. The proposed methodology was found to be appropriate for practical application.