DETERMINATION INVENTORY CONTROL OF RAW MATERIALS USING ECONOMIC ORDER QUANTITY

Abstract

Inventory is important for the company that represent 60% of current assets. PT. XYZ is a company that engages in steel manufacturing industry to produce welding products. This study aims to determine the inventory control using Economic Order Quantity. This study used descriptive quantitative analysis using secondary data provided by the company such as total raw material used, total raw material purchased, ordering costs, holding costs, and frequency order. The current situation of the company, purchased of raw materials was not in accordance with the used of raw materials results in shortage in some raw materials and some was excess. Based on this situation, this study tried to analyze the inventory amount and inventory cost using economic order quantity. The result shows that using calculation of EOQ could help company saving the total cost of inventory up to $7,725.30. Further, this study also providing forecasting for the next following years using the moving average with interval 2 to adjusting the demand of a company. By doing this study, the company can get better performance on the inventory control.