Reduction of Inventory Shortage through Setting a Safety Stock Policy by ABC-VED Classification: A Case Study of MMM Donut Dry Food Warehouse
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Abstract
The objectives of this study were to 1) examine the existing inventory management process, and 2) reduce stockout problems by formulating a safety stock policy through the application of ABC-VED classification in a case study of the MMM donut dry food warehouse. The sample consisted of 289 active stock-keeping units. Data were analyzed using descriptive statistics, including frequency, mean, standard deviation, and percentage, as well as inferential statistics, namely the paired-samples t-test.
The results revealed that previous safety stock levels, based on fixed proportions, did not reflect actual reserve requirements. A new safety stock policy was established, prioritizing AV items with the highest service level, while subsequent groups were progressively reduced. Following the implementation of the policy, the number of stockout items decreased by 62.66%, equivalent to a value of 5,005,745 THB. Statistical testing confirmed that the number of stockout items before and after the implementation of the safety stock policy using the ABC-VED classification method differed significantly at the 0.05 level. These findings are particularly valuable for businesses managing warehouses of dry food and perishable products, where efficient inventory control is essential to meet market demand.
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