Inventory management in a pharmaceutical company : minimizing discard practices

Pharmaceutical company SPM has over 400 cases of inventory discards over the past five years which constitute a significant operating cost. Due to the complexity and randomness of each case, the root causes that result in inventory discards are not identified by the management, thereby hindering SPM from coming up with effective discard minimization practices. This thesis investigates the discard reasons and analyzes the severity of each cause. Raw material expiration is identified as one of the primary discard causes. High raw material inventory level is resulted from the current inadequate inventory management practices in SPM. A raw material inventory management procedure with appropriate inventory grouping strategies incorporating the shelf life is developed in order to help SPM reduce its waste in material expiration. Based on the study of demand information and forecast accuracy, different inventory models are applied to classified inventory groups to determine the amount of inventory to be ordered and kept as safety stock. The study finds that the new procedure reduces the average inventory costs of the items studied by 43%.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Mechanical Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2010

Author dc:creator

• Wang, Xiaojun, M. Eng. Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• Stanley B. Gershwin.

• Mechanical Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/62513

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/62513