Inventory Control by Analyzing the Economic Order Quantity (EOQ) Method to Reduce Low & Off Production

Authors : Luqman Arif, Hasmznnd Zusi, Erry Rimawan.

Volume/Issue : Volume 4 - 2019, Issue 1 - January

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The company in an effort to increase revenue in the condition of world oil prices down now is to prevent the rate of decline in production due to low & off production. Based on existing low & off data from 2013 to 2017 shows a fairly high upward trend, from 10% to 15%. While the maximum target of the company for the low & off rate is 8%. From the background of these problems, it is seen that the cause of the high low & off production is because the supply material to replace damaged equipment is not available (stock out). This research aims to provide an alternative solution to the problem of inventory about optimum stock and saving inventory costs and can offer policies for inventory systems that are implemented in the company so as to reduce low & off production. The results of the study using the EOQ method, ABC analysis and calculation of inventory material forecast obtained EOQ prices, order frequency, safety stock, ROP, maximum inventory and total inventory cost (TIC). From the results of the calculation of Total Inventory Cost (TIC) carried out by the company with the existing method and the calculation of total inventory cost (TIC) using the EOQ model, there is a difference in numbers, which means saving inventory costs by the company Rp. 776,443,130 or 190% of the EOQ model on in 2016 and Rp 810,884,069 or 212% of the EOQ model in 2017, as well as Rp 810,884,069 or 212% of the EOQ model in 2018 From the research it was concluded that the calculation of the EOQ method by considering the assumptions in the study can be used as one of the methods for planning optimal material inventory control so that there is no problem of lack of stock material which will have an impact on high & low production wells. The company is looking at reviewing existing forecasts and seeing trends in material usage, so that the optimum stock of material used is obtained.

Keywords : ABC Analysis, Forecast, EOQ, Order Frequency, Safety Stock, ROP, Maximum Inventory, Total Inventory Cost (TIC).


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30 - June - 2023

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