Background: For many organizations, the transition from being a small business to a growing company demands great changes in the internal administration and processes. One area which often is neglected during this phase of rapid expansion is the processes for handling the planning and purchasing of components. Many young companies do not use systematic methods for managing the planning and purchasing of their inbound materials, instead they put their trust in managing the stock by intuition and prior experience. It’s therefore of interest to examine the possibilities of implementing more formal methods for controlling and planning the purchasing and stock keeping in growing companies. When placing orders, there are different methods for determining the lot sizes, where the Economic Order Quantity and Just In time methods are the two most commonly used. These theories were originally formulated to facilitate the purchasing and stock planning for grand companies during the 20th century. They’re based on the assumption that the company using them are able to order in any quantity desired, which not always is a possibility for small companies. This thesis will focus on investigating if there’s a possibility to use EOQ or JIT to improve the material purchasing and planning process for a small company, and if it’s possible to combine these methods for even further improvements. Purpose: Conduct an article segmentation and based on this examine the possibility to combine the EOQ and JIT methods for control of purchasing and inventory in order to lower these costs for a small company. Method: The thesis uses a deductive approach and is carried out in the form of a case study. The research strategy was mainly quantitative. The analysis was based on data gathered through interviews and from the company’s materials planning system. Conclusion: During the analysis it was discovered that an article classification considering individual purchasing values for each of the article groups, can outperform the more classical way of forming groups based only on percentage values. The other part of the analysis showed that there are currently economic incentives for the studied company to change the current way of material control to an customer order based method for article group A and B. But due to limitations in the company’s current supplier base and the high variance of demand it’s not currently recommended for the company to switch to the JIT approach when planning the material purchasing. The EOQ approach will lower the ordering costs and inventory holding costs for all segments, and combined lower the company’s total purchasing and inventory costs with 38,4%. As a result EOQ will in the current situation be the most efficient purchasing and material planning tool for all segments.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:vxu-2123 |
| Date | January 2008 |
| Creators | Frii, John, Eklund, Jesper, Agnesson, Daniel |
| Publisher | Växjö universitet, Ekonomihögskolan, EHV, Växjö universitet, Ekonomihögskolan, EHV, Växjö universitet, Ekonomihögskolan, EHV |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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