An Economic Production Quantity Model for Atlantic Pharmaceuticals Laboratories

Abstract

Inventory in an industry is considered like a blood in the body, and almost 50% of investment is made on inventory. Therefore, keeping the optimum level of inventory at low possible cost is the primary focus of researchers. Industries have to make good choices for inventory management in order to compete in market and meet the demands. Major issues regarding inventory in pharmaceutical industry are overstock, unjustified forecasting technique, long manufacturing lead times and lack of IT support. For these reasons, optimizing inventory is more difficult for pharmaceutical companies as compared to other manufacturing companies. Such issues are also faced by Atlantic Pharmaceuticals Laboratories (APL). In order to address these issue, inventory management is performed in APL. Inventory is categorized in three classes through ABC analysis. Class A items are further analyzed and their optimum quantity is determined by EPQ model. At the end sensitivity analyses are performed to determine the most and least critical parameters of the model.