A Conceptual Model of Inventory Management System using an EOQ Technique – A Case Study in Automotive Service Industry

Abstract

The successful implementation of inventory management system (IMS) in an organization will give the high impact to their business growth and sustainability. Due to the rapid growth in the automotive industry, the need of having this system in this industry is increase especially in the automotive maintenance business. Although there are varieties of choices of the IMS software available in the market, however, financial constraints become the most important barriers to an organization to implement the system. In this paper, the level of implementation of the IMS in Malaysian automotive service industry is identified. A model of IMS by using the Economic Order Quantity is proposed to be implemented in the independence automotive services workshop as an alternative to the high cost investment of the system in the selected industry. Four products that have the highest usage in the workshop are selected. Three different techniques of forecasting are compared in order to predict the demand of the selected products and to develop the economic order quantity. Based on the results, the data that forecasted by Simple Moving Average technique gives the most accurate data and this technique is selected in the development of IMS model.