Inventory modeling and use of Kanban for intermediate products in a pharmaceutical company.
Date of Issue2007
TCG is a multinational pharmaceutical company. As part of its drive to stay lean and competitive, TCG hopes to effectively maximize its capital assets by reducing warehouse inventory. This thesis aims to develop a simulation model for TCG’s planners to use for what-if scenario analysis and to reduce the inventory of intermediate products through the use of inventory controls. With an inventory supermarket kanban, motion waste is not reduced but the inventory level is capped at a maximum level. This prevents uncontrolled accumulation of inventory of intermediate products. The target inventory level is determined based on production capacity and future demand factors. With a simulation model of one of TCG’s facilities, production planners are provided with a tool to perform what-if scenario analysis. The effects of various heuristic production policies, demand and production capacity on the output of the facility can be explored and help capacity planners determine the average inventory level.