Optimal Ordering Strategy for Seasonal Demand Goods -- An Empirical Study of Clothing Industry

[[abstract]]Clothing industry is a very important traditional industry for Taiwan. Clothing goods has a special characteristic related with seasonal demand. The sales amount of different clothing goods will up and down in accompanied with different seasons. Most clothing related companies, in Taiwan, make their order according to individual’s practical experience. Usually, they are facing with high stock quantity if no smart order decision-making strategy can be followed. This study explores the relationship among the changes in demand, inventory and order quantity from suppliers, warehouses and customers under the known demand and supply conditions, based on the historical transaction data of a Taiwan clothing sales company. In order to minimize the cost of inventory and to develop the best ordering strategy, we make an objective function first for minimizing the inventory cost. The LINGO software is then applied to assist the simulation computation. In this research, we obtain a better inventory cost improvement in comparing with the traditional experience approach by using the sample clothing company as an example