This paper determines an inventory policy for semi-finished products in a case study of enamel paint production. The semi-finished products include pigment pastes. They are main components which are commonly used during tinting process to adjust the quality of color. Shortages of pigment pastes can interrupt the production process. In order to prevent the inventory shortages, this research proposes a method to systematically determine the pigment paste inventory policy. The proposed inventory policy suggests a periodic review system with reorder point and fixed order quantity policy or (R, s, Q) inventory model with cycle service level 99% while keeping the average inventory less than or equal to the current practice. This inventory policy is constructed under production constraints as well as stochastic demand and lead time. The proposed policy is tested with simulation model by comparing the results from the proposed policy with the current practice. The results show that the cycle service level for all items has improved to meet the target level of 99% which implies the shortage reduction. In addition, average inventory level and the number of setups can be reduced by approximately 48% and 47%, respectively.
Keywords
inventory policy, (R, s, Q) model, service level, paint production