Multi-stage inventory control method based on item characteristics

A new inventory control method reducing both the physical distribution cost and the inventory is proposed. This method obtained through the case study of a certain confectionery manufacturer has three basic functions: selection of the transportation routes based on item characteristics; allocation algorithm of the transportation volume to each regional distribution center; and function coping effectively with the change of item characteristics. The validity of the proposed method is shown by simulation results. The results denote that the physical distribution cost and the inventory are reduced to 89% and 49% respectively, compared with conventional methods. And the knowledge about system analysis/planning, which was obtained through the case study, is described.