HOLDING COST REDUCTION BY APPLYING ABC-XYZ ANALYSIS COMBINED WITH FORECASTING: A CASE STUDY OF A TIRE DISTRIBUTION BUSINESS IN UDON THANI PROVINCE

Abstract

This research aims to holding cost reduction by applying ABC-XYZ analysis combined with forecasting: a case study of a tire distribution business in Udon Thani Province. The study begins with the ABC-XYZ analysis to classify inventory items based on their value and demand variability to develop appropriate ordering plans. Subsequently, a suitable time-series forecasting model is evaluated by comparing the forecasting error metrics, including MAD, MSD, and MAPE, for inventory items in category AY, which have high value and consistent demand. The results from classifying 42 inventory items identified five groups: AY, AZ, BY, BZ, and CZ. Group AY was tested using four forecasting methods: 1) Double Exponential Smoothing, 2) Triple Exponential Smoothing, 3) Decomposition, and 4) ARIMA. The ARIMA technique demonstrated the highest accuracy, making it the most suitable for the context of this business. The findings indicate that the integration of ABC-XYZ analysis with ARIMA forecasting significantly improves the efficiency of ordering planning, inventory control, and inventory holding cost reduction. This approach provides a practical solution for businesses aiming to effectively manage and reduce inventory costs.