DESIGNING INVENTORY PLANNING FOR STOCHASTIC DEMAND AT APPAREL’S LABEL INDUSTRY, CIKARANG

Abstract

This research discusses about designing new inventory planning for stochastic demand at apparel’s label industry in Cikarang, especially for RFID product. It begin with observation regarding to the material availability and current forecasting data from global headquarter which cause the material shortage. The core value of this research is to determine the best inventory planning by using total cost as the parameter. Since the data plot of this problem shows trend, seasonal, and cyclic as well, ARIMA is chosen as a proposed forecast method which can solve any pattern behavior of time series data with high accuracy. The selected ARIMA model will be used to forecast RFID demand for several periods a head. EOQ approach is used to calculate the optimum order quantity, reorder point, safety stock, and total cost that incurred in the inventory. The result of this research shows that the proposed forecast method successfully reduce the forecast error by 23.5%, and the inventory planning can reduce the total cost from IDR 8,793,333,100 to IDR 7,670,128,874 or by 12.8%. Moreover, the implementation of (Q,R) model with optimization approach by using ocean freight offers the lowest total cost for the next periods with the total cost IDR 7,827,704,823.