Study of the Scrap Steel Inventory Control Based on Inventory Theory

The scrap steel inventory control is analyzed based on the data of a certain steel company. To aim at the oversize of purchasing quantity and inventory level of centralized procurement, the conclusion that the key link to control inventory lies in the purchasing and ordering process is obtained according to the analysis of logistics implementation process. Based on this analysis, quantitative order model and periodic order model are put forward; the building and using conditions of the two models are introduced respectively. Due to the fixed lead time and the steel company´s demand which follows a normal distribution, the optimal order quantity of centralized procurement which meet 98% demands under the optimal order model is solved by periodic order policy in steel company. The company´s steel inventory control is strengthened through quantitative analysis and the aim for reducing inventory costs can be achieved.