Inventory Optimization: Determining Major Inventory Parameters in the Case of Hops at the Kenya Breweries Limited

Abstract

Most organizations have always wanted to optimize use of the limited resources that they find themselves endowed with so as to reap maximum possible profits. Optimizing use of inventory is one such a resource that organizations have to focus on. Several models have been developed to aid management regarding this issue. Such models have been developed and widely applied in the developed world. Little effort, if any, has been expended in the less developed countries to apply scientific techniques in managing resources such as inventory. The primary objective of this study was to analyze hops inventory parameters and see whether it could be possible to identify a model that could be applied in the management of hops inventory. The parameters of interest in the management of hops were: Lead-time, demand, ordering and carrying costs. Data on these parameters was collected from the head office of Kenya Breweries Ltd. A modified Economic Order Quantity model with a capital constraint was found appropriate in the hops inventory situation