IMEG was hired by an industry leading manufacturer of pumps to evaluate optimal WIP levels and changes in inventory costs for a high-cost component.
THE PROBLEM
Uncertainty in the accuracy of current inventory levels
Undefined Overall Equipment Effectiveness (OEE)
High setup costs & high material costs
One shared machine resource with 49-part numbers in varying batch sizes & setup times
material costing analysis
THE PLAN
Use current batch sizes to calculate the current frozen inventory costs
Perform a ‘what if’ costing analysis using the Evolutionary Solving Method to evaluate how inventory and setup costs changed based on OEE, batch size, and number of available machines
Find the situation or batch size combinations with the lowest costs and best inventory turns ratio
optimal material flow
material costing analysis
THE RESULTS
Delivered a comprehensive plan with multiple actionable options
Analysis on what alternate batch sizes could be used to reduce inventory costs
Showed how cost would change if OEE is improved, or another machine resource is purchased
Highlighted the differences in inventory and setup cost based on changing the number of batches produced per year
