L’OREAL – Classification of Active Cosmetics Department Products and Determination of Product Stock Policies

Group: Bahadır Kelez, Aykut Kuzucu, Başak Şahin, Yusuf Halit Sanıç, Burcu Şaşkın 

L’Oreal Active Cosmetics Division, founded in 1989, is active in Turkey dermocosmetic products market with lots of products. Products of L’Oreal are manufactured in USA and France and then stocked in a warehouse in France. Products coming from warehouses in France are received into the warehouse stock in Gebze and then products are sent to distributors for sales of products to pharmacies by means of distributors. In existing system of L’Oreal Active Cosmetics Division, various problem symptoms were observed which were product stock outs, inadequate inventory classification method and its use, high level of inactive stock and low inventory turnover rate. By using these symptoms, the aim of our project is to improve the performance measures like total inventory holding cost, total lost sale cost, truck utilization rates and service levels of distributors by changing inventory classification method and inventory managament policies of L’Oreal Active Cosmetics Division and creating a system which will allocate the inventory of L’Oreal Turkey Active Cosmetics’ Division to the distributors in a way that make distributors have equal probability of stock out. For this purpose, an inventory classification method was improved  and an Excel VBA based system which determines the content and amount of orders coming from France while minimizing the total cost and maximizing the truck utilization rates and considers different scenarios while allocating inventory to distributors was created.