MATERIAL COSTING ANALYSIS

inventory cost reduction

SERVICE AREA:

IMEG was hired by an industry leading manufacturer of pumps to evaluate optimal WIP levels and changes in inventory costs for a high-cost component. To address this, IMEG focusing on reducing inventory and setup costs through material costing, and analyzed the effects of differing batch sizes.

THE PROBLEM

optimal material flow

THE PLAN

IMEG applied a structured Material Costing Analysis methodology to uncover cost-saving opportunities. The key actions taken included:

Using current batch size data to establish baseline inventory cost and WIP levels
Performing "what-if" scenarios using the Evolutionary Solving Method to evaluate OEE, setup duration, and machine availability impact
Identifying optimal batch size and frequency combinations to minimize cost per unit
Analyzing how shifts in batch size and machine use affected inventory turnover
Delivering data-driven insights into how capital equipment or performance improvements would impact cost

batch size optimization

manufacturing cost optimization

material costing analysis

THE RESULTS

Delivered a comprehensive plan with multiple cost-effective batch size options
Developed a clear insight into how alternate batch sizing impacts inventory costs
Visibility into cost changes if the OEE improves or additional machines are added
Detailed comparisons showing how changing annual batch quantities affect both set-up and inventory cost