June 2016 Vol. 5 No.1

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Original Research Article

A Case Study of Spare Parts Inventory of Printing Industry using ABC and VED analysis

Muhammad Ayat

Department of Industrial Engineering and Management, Dawood University of Engineering and Technology, Karachi, Sindh 74800, Pakistan

E-mail: ayat@sabanciuniv.edu
Tel.: +92 346 2933446

Accepted June 13, 2017

Abstract

Spare parts inventory is required in industries for maintenance and repairing of machines, equipment, and vehicles. Managing spare parts inventory is a complex task due to huge number of variety and its lower demand. In this study, inventory control techniques i.e. ABC (Always Better Control), VED (Vital, Essential, Desirable) analysis and ABC-VED matrix analysis have been applied to spare parts inventory of a printing industry to identify the items requiring strict management control. Data was collected mainly from the log book of the company and through interviews of middle and lower staff of technical store, production, purchasing, and maintenance departments. The expenditures of the items of each category for the year 2016-17 were analyzed using inventory control techniques. ABC analysis showed that 15% items were from category A and category B each, remaining 70% items were from category C accounting for around 66%, 15% and 19% of total annual expenditure of technical store respectively. VED analysis identified 34.91% items as Vital, 54.58% items as Essential and 10.57% items as Desirable accounting for 48.74%, 46.26% and 4.98% of total annual expenditure of the technical store respectively. On ABC-VED matrix analysis, 39.93%, 51.82% and 8.23% items were placed in category I, category II and category III, respectively, amounting for 79.81%, 19.16% and 10.01% of total annual expenditure. Based on these analysis, practical suggestions have given for industries about optimal stock, order quantity and reorder points. The benefits of the current study were reduction in dead stocks and rationalizing the number of items of each category of inventory, which leads to reduce capital investment and avoid disruption in process due to unavailability of spare parts inventory.

Key words: Inventory control, ABC analysis, VED analysis, Technical store, Spare parts