Analysis of Excess Stock in Multiproduct Inventory Systems

A primary function of production management is the control of inventories. The typical manner of economic inventory control calls for a “pre-stocking” approach in which the focus is on the reorder quantities which should be put into inventory. A second manner of controlling inventories is what can be called a “post-stocking” analysis. Here the focus is on how much of the present inventory already in stock should be declared as surplus and disposed of. This paper describes the development and implementation of an analytical procedure for this second, excess inventory issue. The procedure is described in the context of an application to a General Motors carburetor assembly process in which product structure interactions play a significant role.