Identifying the root causes for inventory accumulation and prioritizing them using an MCDM-based TOPSIS approach

PurposeInventory accumulation is a major problem for any organization, as it not only occupies the valuable storage space, but it also blocks the company's capital, leaving the owners with less cash to run the company's business. Aggregation of inventory in any organization contributes to inventory carrying cost; it affects labor productivity, increases equipment expenses and creates a loss of opportunity associated with it. Therefore, it is essential for any organization to come up with a solution to deal with the stockpile of inventory.Design/methodology/approachThis research aims to examine the potential causes of inventory aggregation in an organization. First, the potential factors for the build-up of inventory are identified from survey data collection, such as questionnaire approach and discussion with industry experts, and then weights are assigned to attributes to study the effects for these factors. After the identification of probable causes, they are analyzed through a multi-criterion decision-making (MCDM) approach and the technique for order of preference by similarity to ideal solution (TOPSIS) to prioritize the severity of these causes toward the accumulation of inventory and take corrective actions to prevent their disruptive effect on the business.FindingsThe top three causes identified from the TOPSIS analysis are sales and forecasting error, defects and quality related issues and communication gap between departments. Firstly, we focus on these major contributors and prioritize them using the TOPSIS analysis. Then, we proceed further toward other factors. The main reasons identified for the accumulation of inventory are (1) forecasting error, (2) bulk purchase, (3) data entry error, (4) communication gaps, (5) quality-related issues, (6) product category not traceable and (7) wrong material being procured.Research limitations/implicationsTo carry out the data analysis in this research paper, first survey data collection is done. Then, discussions with managers and executives in the particular domain are carried out, and weights are assigned to the attributes and the criteria to study the effects of the identified factors. After that root cause analysis (RCA) is performed to get to the genesis of the problem and to take necessary corrective action, for carrying out this study, a total of seven potential causes were identified and the contribution of these seven causes on five attributes or criteria, i.e. quantity (in tons), holding and carrying cost, effect on labor productivity, loss of opportunity cost and storage space were studied.Originality/valueThis research paper is the author’s original work, and all the analyses carried out are from the discussion with experts in the field and through the in-depth analysis carried out. This research aims to examine the potential causes of the accumulation of inventory in organizations and their contribution toward factors like inventory carrying cost, labor productivity, and opportunity loss and excessive storage space have been analyzed. This research provides great value to the readers in the respective domain.

Prioritizing the reasons for non-moving inventory accumulation in FMCG industry: A MCDM based TOPSIS Approach

Generation of Non-moving inventory (NMI) in any industry is an annoyance for the people involved, as it occupies the storage space that is limited and also blocks company’s capital that gets stuck in the form of material cost. These Non-moving inventory, if identified at earlier stage can be beneficial for any business, as some preventive actions can be taken to prevent its distressing affect. This generally starts with a slow moving inventory and then gradually translate to Non-moving inventory. This research aims to examine the potential causes for the accumulation of Non-moving inventory in the FMCG industry and their contribution towards the factors like Inventory carrying cost, Quantity left over in inventory, effect on labor productivity, loss of opportunity cost and storage space have been analyzed. The causes for generation of NMI are identified from survey data collection such as questionnaire approach and discussion from industry experts and managers working in different FMCG industries. After the identification of probable causes for non-moving inventory creation, they are analyzed through a Multi-criterion decision making (MCDM) approach, TOPSIS to find out the major contributor for the NMI in the FMCG industry. With the help of MCDM tool, TOPSIS we then prioritize the potential causes and take corrective actions to prevent their disruptive effect on the business.

Structural Interpretation of Vector Autoregressions with Incomplete Identification: Revisiting the Role of Oil Supply and Demand Shocks

Traditional approaches to structural vector autoregressions (VARs) can be viewed as special cases of Bayesian inference arising from very strong prior beliefs. These methods can be generalized with a less restrictive formulation that incorporates uncertainty about the identifying assumptions themselves. We use this approach to revisit the importance of shocks to oil supply and demand. Supply disruptions turn out to be a bigger factor in historical oil price movements and inventory accumulation a smaller factor than implied by earlier estimates. Supply shocks lead to a reduction in global economic activity after a significant lag, whereas shocks to oil demand do not. (JEL C32, L71, Q35, Q43)

Japan GDP slump masks social and economic change

Subject Japan's changing services sector. Significance GDP fell 0.6% (annualised) in the first quarter of 2018, revised figures released on June 8 show, ending eight quarters of consecutive growth. Most sectors contributed to the downturn, including household consumption, residential construction and inventory accumulation. However, the revisions pushed up the previous quarter’s growth to 1.0% from the 0.6% initial estimate. Impacts Rising aggregate employee pay should eventually outweigh workers’ qualms over low wages and part-time work to raise household consumption. A sharply rising real trade balance reported for April suggests a GDP impetus in the next quarter. Disruptive winter storms may have caused weaker household spending; with better weather consumers could now return to the shops. The market for internet and digital services will grow.