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Master of Agribusiness

Utilizing Economic Order Quantity in a Multiple Input and Output Facility to Manage Inventory Flow

Craig Hagood, Raleigh, North Carolina, defended his thesis, “Utilizing Economic Order Quantity in a Multiple Input and Output Facility to Manage Inventory Flow,” Monday, October 17, 2005. Hagood is the Vice President of Technical Services at House-Autry Mills, Inc., a food manufacturer producing grain-based dry mixes in Four Oaks, NC.

House-Autry Mills, Inc. is a growing company considering expansion.  Before making the capital expenditure of a new warehouse to store more raw materials and finished goods, House-Autry Mills, Inc. needed to determine if the warehouse inventory was being managed efficiently.  Hagood set out to determine the optimum inventory management of raw materials for House-Autry Mills, Inc. production process.

He found that tools such as Economic Order Quantity can be effectively used to make solid business decisions regarding the management of warehoused inventories as long as all the constraints of the particular industry and facility can be met. Hagood also discovered the cost of freight transportation greatly affects the efficiency of inventory management.

Dr. Bryan Schurle, Hagood’s thesis advisor, said, “Craig did an excellent job of looking at inventory costs, and ordering costs to determine how often to order ingredients for his company.  What he found is that transportation costs are extremely important because they result in discounts when truckload quantities are purchased.  In fact, transportation costs and those discounts are so large relative to the other costs that they often drive the decision of how much and how often to order ingredients.  This is an important finding for companies trying to manage inventories and purchasing in an efficient manner particularly in light of the huge increase in energy costs recently.”

Hagood believes he has learned important skills while researching the subject and completing his coursework to earn his Master of Agribusiness (MAB).

“The MAB program has been extremely helpful in developing my management skills beyond the technical field experience and undergraduate Food Science degree I had prior to this endeavor.  I look forward to utilizing this new agribusiness knowledge and tool-set I learned with the MAB in helping House-Autry Mills, Inc. grow and meet our strategic objectives,” said Hagood.