DETERMINING SERVICE LEVEL BY FORECASTING DEMAND AND ANALYZING SAFETY STOCK FOR INTERMITTENT PARTS IN PT. ZZZ

Abstract

Company ZZZ is company which does not dwell in the market where the product should be massive and continuous; therefore company needs special attention on spare parts inventory handling because there will be many unique spare parts need to be controlled in ther warehouse. Thus, it impacts on the increase of over stock part and stock out part. The increase number of stock out and over stock part is affecting inventory cost and customers satisfaction. This research is aimed to reduce over stock, stock out, and find optimum value of inventory cost and service level by using parts classification, forecasted demand, safety stock, and tradeoff between inventory cost and service level. Ten parts have been selected; nine out of ten are classified as intermittent part and the last one is classified as lumpy part. Croston’s and Syntetos-Boylan Approximation Method are used to forecast future demand for all ten parts, and safety stock is also calculated. By given several different service level, it is also calculated the tradeoff between inventory cost and service level. It can bring impact to reduce inventory cost up to IDR 17,738,842. This new model is constructed by combining the usage of current and proposed inventory system.