Inventory optimization for slow-moving products: a case study in the materials handling and industrial equipment industry in Thailand

In every industrial, warehousing, and distribution operation, materials handling equipment is considered as a critical component in assisting safe and efficient movement of goods, from raw materials, work-in-progress, to finished products of various shapes and sizes. Although crucial in nature, this equipment is generally considered as an afterthought, and funding for procurement of such equipment would be cut when a company prioritizes cost-saving measures. As companies are struggling to re-emerge from the aftermath of the pandemic, a massive influx of foreign competition caused a massive shock in terms of competitiveness for the existing local businesses. As such, local companies resorted to cost-cutting measures to remain relevant in the market. However, this caused a ripple effect to the existing inventory forecast methods, as demand for certain materials handling and industrial equipment has seen a plunge and began to excessively accumulate which in turn affecting inventory holding costs, possible damage from long-term storage, and obsolescence. Quick measures, such as immediate price cuts and generous payment terms to incentivize customers have seen minimal success, as demand for industrial goods is not as elastic as consumer goods. This study explores the dynamics of the materials handling and industrial equipment market, existing inventory data from the company in such market and the possibility of using optimization models to assist with the optimization of such inventory.