Use of the AHP Method to Evaluate Key Inventory Control Indicators: Case Study of a Taiwanese Manufacturer in China

Abstract

SUMMARY Control of inventory is a crucial management task that can affect a company's success and survival, and good inventory control offers many benefits. In this paper, the Analytic Hierarchy Process (AHP) method is used to investigate key inventory indicators at a manufacturer and obtained an initial set of factors influencing inventory control, including five major assessment dimensions and 15 assessment criteria. "Rolling customer demand forecast accuracy" was a key assessment dimension that can be used to evaluate the case company's inventory. The five most important key inventory control indicators consisted of "forecasting accuracy," "purchases in China," "production, sale, and inventory (PSI) meeting," "skilled worker turnover rate," and "major changes in market demand." In addition, these key indicators are discussed and some practical recommendations are made.