Inventory management of 50 kg packaged cement products with a lot sizing ratio (case study: XYZ warehouse)

Abstract

XYZ is a trading and shipping company for building needs. The problem experienced by XYZ Warehouse is the high demand for Conch 50 kg cement products without being balanced with good inventory management so that companies often experience shortages and excess supplies which can increase inventory costs. Therefore, good inventory planning and control are needed to make the costs incurred is more optimal. The model used in this study is the Economic Order Quantity (EOQ) model by calculating safety stock and reorder points to avoid demand uncertainty. Before calculating the inventory model, forecasting was done using the Moving Average 6 method as the chosen method with MAD 4,712,852, MSE 37,283,346,809, and MAPE 15.502%. Based on the calculation results, the optimal order quantity was 1,868, safety stock was 185, and reorder point was 1,320. Other than that, the lot-sizing technique was also carried out using the EOQ, LFL, POQ, and Silver Meal methods. Based on the calculation result, the lot-sizing technique that provides a minimum total cost was the LFL method with a total cost of Rp. 1,430,406.61 and savings up to 77.04%, followed by the EOQ method with a total cost of Rp. 1,918,668.55 and savings up to 69.21%. Also, the POQ and Silver Meal method with a total cost of Rp. 2,106,571.61 and savings up to 66.19%.