Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
권호 표지
DOI QR코드

DOI QR Code

On Rule-Based Inventory Planning Over New Product Launching Period

신제품 출시 시점의 규칙기반 재고계획에 관한 고찰

  • Kim, Hyoungtae (Department of International Business Management, Woosong University)
  • Received : 2016.07.08
  • Accepted : 2016.09.19
  • Published : 2016.09.30
Download PDF
⟨ Previous Next ⟩

Abstract

In this paper we have tackled the outstanding inventory planning problems over new product launching period in a more holistic manner by addressing first the definition of efficient business rules to effectively control and reduce the inventory risks followed by the rigorous explanations on the implementation guide on suggested inventory planning rules. It is not unusual for many companies in the consumer electronics market to make a great effort to reduce the time to launch a new product because the ability to bring out higher performing products in such a short time period greatly increases the probability for them to remain competitive in the high tech market. Among so many newly developed products, those products with new features and technologies appeal to many potential customers while products which fail to win customers by design and prices rapidly disappear in the market. To adapt to this business environment, those companies have been trying to find the answer to minimize the inventory of old products so they can move to next generation products quickly with less obsolete material. In the experimental implementation of our rule-based inventory planning, Company 'S' reduced the inventory cost for the outgoing products as low as 49% of its peak level of its preceding product version in just 5 month after the adoption of rule-based inventory planning process and system. This paper concluded the subject with a suggestion that the best performance of rule-based inventory planning is guaranteed not from one-time campaign of process improvement along with system development but the decision maker's continuing support and attention even without seeing any upcoming business crisis.

Keywords

References

  1. Bassok, Y., Anupindi, R., and Akella, R., Single-period multiproduct inventory models with substitution, Operat. Res., 1999, Vol. 47, No. 4, pp. 632-642. https://doi.org/10.1287/opre.47.4.632
  2. Billington, C., Lee, H.L., and Tang, C.S., Successful strategies for product rollovers, Sloan Manage. Rev., 1998, Vol. 39, No. 3, pp. 23-30.
  3. Childs, L., Predictive Demand Supply, White Paper, 2004, Available online at : www.technologyevaluation.com.
  4. Goyal, S.K. and Giri, B.C., Recent trends in modeling of deteriorating inventory, Eur. J. Operat. Res., 2001, Vol. 134, No. 1, pp. 1-16. https://doi.org/10.1016/S0377-2217(00)00248-4
  5. Kim, H., Research on Risk-Averse Newsboy under Supply Uncertainty, Journal of the Society of Korea Industrial and Systems Engineering, 2013, Vol. 36, No. 3, pp. 43-50. https://doi.org/10.11627/jkise.2013.36.3.43
  6. Kwon, H. and Kim, M., Designing an Inventory Model of Parallel-Type Distribution System, Journal of the Korean Society for Quality Management, 1989, Vol. 17, No. 1, pp. 11-18.
  7. Li, H., Graves, S.C., and Rosenfield, D.B., Optimal Planning Quantities for Product Transition, Production and Operations Management, 2010, Vol. 19, Issue. 2, pp. 142-155. https://doi.org/10.1111/j.1937-5956.2009.01091.x
  8. Ling, R.C. and Goddard, W.E., Orchestrating Success : Improve Control of the Business with Sales & Operations Planning, John Wiley Sons, Inc., 1995.
  9. Mahajan, S. and Van Ryzin, G., Stocking retail assortment under dynamic consumer substitution, Operat. Res., 2001, Vol. 49, No. 3, pp. 334-351. https://doi.org/10.1287/opre.49.3.334.11210
  10. Pasternack, B.A. and Drezner, Z., Optimal inventory policies for substitutable commodities with stochastic demand, Navel Res. Log., 1991, Vol. 38, No. 2, pp. 221-240. https://doi.org/10.1002/1520-6750(199104)38:2<221::AID-NAV3220380208>3.0.CO;2-7
  11. Sharma, R., Zyom Profitable Product Transition, Technical Report, Zyom, inc., 2004.
  12. Simchi-Levi, D., Kaminsky, P., and Simch-Levi, E., Designing and Managing the Supply Chain : Concepts, Strategies, and Case Studies, McGraw-Hill Higher Education, 2004.
  13. Smith, S.A. and Agrawal, N., Management of multiitem retail inventory systems with demand substitution, Operat. Res., 2000, Vol. 48, No. 1, pp. 50-64. https://doi.org/10.1287/opre.48.1.50.12443
  14. Song, J. and Zipkin, P.H., Managing inventory with the prospect of obsolescence, Operat. Res., 1996, Vol. 44, No. 1, pp. 215-222. https://doi.org/10.1287/opre.44.1.215
  15. Wallace, T.F., Sales & Operations Planning : The Howto Handbook (2nd edn), 2004, T.F. Wallace & Co.