Implementation of a Replenishement Process Utilizing the Base Stock Model

Communication and transparent procedures must translate into robust processes to ensure on-time delivery of components, lower inventories, and a faster response to changing customer demands. This thesis is based on research done at the equipment manufacturing division (HPISM) of Eastrnan Kodak Company. The focus is on the development of a JIT replenishment process and inventory management practice. The intent of this thesis is to identify critical supply chain characteristics, discuss their implications in determining how to structure a replenishment process, and outline a specific effort to implement a replenishment process back through Kodak's supply chain. Some of the challenges that Kodak faces when designing a new raw material replenishment process include space limitations, demand volatility, differentiating component characteristics, long component lead times, end of life issues, supplier reliability, and operating an MRP bases system in a Demand Flow Technology environment. Upon studying the supply chain and identifying key characteristics that impact logistics decisions, a general part flow methodology is presented. Utilizing principles of a base stock policy and an "order-up-to" decision system, inventory targets are developed and a preliminary test confirms feasibility. The end result is a framework to guide the design of a JIT/replenishment process. The impact expected from this thesis is a $2M reduction of raw material inventory once fully implemented. Additional long-term benefits include improved decision-making processes regarding inventory control, better customer responsiveness, simplified management processes, and lower administrative costs. Thesis Advisors: Donald B. Rosenfield, Sr. Lecturer, Sloan School of Management Alvin W. Drake, Professor of Electrical Engineering and Computer Science