Control of Finished Goods Stocks in Dunlop Tyre Division

Abstract

The objective of the research was originally defined to be the study of the feasibility of developing a more efficient stock control and replenishment system, covering the requirements of the sponsor's European marketing operations. Firstly, the general theories of inventory control and of organizations are reviewed separately, and then the theory is applied to the analysis of the organization of inventory control in the region of interest. As a result, general recommendations are made for the application of inventory control methods, and, realising the practical limitations to change which exist in such an organization, a design strategy is proposed for development towards the eventual objective of implementing a "push" system. The rest of the research is devoted to specific methods of improving the quality of information used in the current decision making mechanisms, with the aim of providing something of more immediate and practical value to the sponsor. An automatic forecasting procedure is developed to cope with the characteristics of European demand. The procedure is based on Bayesian methods, so that it can be adapted for interactive use, and it also includes a facility for detecting and coping with discontinuities in the data. An analysis of actual demand from Europe is made, showing the model to be suitable for its characteristics, and the response of the procedure is demonstrated on several product histories. Computer data files are used to compare the lead times of the principal planning activities between customers and between product groups, and the analysis is used as the basis of proposals for improvements in both operational and management reporting of lead times.