REDUCING INVENTORY COST USING DETERMINISTIC METHODS FOR MULTIPLE INDEPENDENT RAW MATERIAL

Abstract

Inventory Cost is consisting of Order and Hold cost which determined by the company regulation for the replenish system. Currently the company is does not have any inventory control method. The objective of this research is to reduce the total inventory cost by using one of two deterministic inventory control methods which are Joint Economic Order Quantity and Joint Economic Order Intervals. There is also a forecasting calculation to predict the future demand. The optimal ordering quantity and intervals always change from one period to another period, so there is need a re-calculation for each period ends. As conclusion, Joint Economic Order Quantity has been successfully in creating new total inventory cost as much as IDR 190,131,157 while Joint Economic Order Intervals is makes new total inventory cost as much as IDR 192,440,273. So, the method that will be propose for the company is Joint Economic Order Quantity.