Analysis Of Control Of Tea Raw Material Inventory With Economic Order Quantity (EOQ) Method (Case Study: PT. Sinar Sosro Medan)
The Importance of Inventory Management in Companies
In today's competitive business environment, inventory management plays a crucial role in the success of any company. Inventory serves as the main source for carrying out the production process, and determining the right amount of inventory becomes a crucial issue because it can directly affect the company's profits. This article will discuss the analysis of controlling tea raw material inventory in PT. Sinar Sosro Medan uses the decomposition forecasting method and the Economic Order Quantity (EOQ) method.
Inventory Problems: Challenges in Managing Inventory
Companies are often faced with challenges in managing inventory. If inventory is too much, storage costs will increase, whereas if too little, the risk of lack of raw materials that can interfere with the production process will be high. Therefore, the appropriate approach in determining the amount of inventory is needed to maintain a balance between costs and the availability of raw materials. Effective inventory management is essential to ensure that companies can meet customer demands while minimizing costs.
The Methods Used in This Study
In this study, the authors used two methods, namely:
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Decomposition Forecasting Method: This method is used to predict the demand for raw materials for tea. By breaking data into seasonal components, trends, and cycles, companies can estimate future needs in the future. Decomposition forecasting is a powerful tool for predicting demand, and it can help companies to make informed decisions about their inventory levels.
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Economic Order Quantity (EOQ) Method: This method aims to find the optimal number of orders, so that inventory costs can be minimized. By calculating the ideal order, the company can plan the purchase of raw materials more efficiently. EOQ is a widely used method for inventory management, and it can help companies to reduce their inventory costs.
Analysis Results: Forecasting Demand and Optimal Order Number
Based on the results of calculations made on data at PT. Sinar Sosro Medan, obtained some important information as follows:
- Forecasting Demand: In 2017, the total demand for tea raw materials is estimated to reach 144,952,094 kilograms or equivalent to 2,899,042 sacks. Demand forecasting is essential for companies to ensure that they have enough raw materials to meet customer demands.
- Optimal order number: Using the EOQ method, it was found that the optimal number of orders was 162,048 sacks. Optimal order quantity is essential for companies to minimize their inventory costs.
- Ordering frequency: companies need to place an order 18 times a year. Ordering frequency is essential for companies to ensure that they have a steady supply of raw materials.
- Safety Inventory: To anticipate uncertainty, a safety supply is 30,825 sacks. Safety inventory is essential for companies to ensure that they have enough raw materials to meet unexpected demands.
- Re -ordering point: Re -ordering point is set at 3,972 sacks to make sure the stock is not used up. Re-ordering point is essential for companies to ensure that they have enough raw materials to meet customer demands.
- Total inventory costs: The total cost required to supply tea raw materials during 2017 is Rp. 44,725,149.3. Total inventory costs are essential for companies to ensure that they are minimizing their costs.
Conclusion: The Importance of Inventory Control Analysis
Control of tea raw material inventory at PT. Sinar Sosro Medan shows that by using the forecasting method of decomposition and EOQ, companies can predict their needs and optimize the ordering process. With this approach, companies can not only reduce inventory costs, but also ensure the smooth production by minimizing the risk of lack of raw materials. Therefore, the application of this method is very important to increase company efficiency and profitability. Inventory control analysis is essential for companies to ensure that they are making informed decisions about their inventory levels.
Future Research Directions
This study provides a comprehensive analysis of the control of tea raw material inventory at PT. Sinar Sosro Medan. However, there are several areas that require further research. For example, the study only focused on the decomposition forecasting method and the EOQ method. Future studies can explore other methods, such as the ABC analysis and the VED analysis. Additionally, the study only analyzed the data for 2017. Future studies can analyze the data for other years to see if the results are consistent.
Conclusion
In conclusion, this study provides a comprehensive analysis of the control of tea raw material inventory at PT. Sinar Sosro Medan. The study shows that by using the forecasting method of decomposition and EOQ, companies can predict their needs and optimize the ordering process. With this approach, companies can not only reduce inventory costs, but also ensure the smooth production by minimizing the risk of lack of raw materials. Therefore, the application of this method is very important to increase company efficiency and profitability. Inventory control analysis is essential for companies to ensure that they are making informed decisions about their inventory levels.
Q: What is inventory control analysis?
A: Inventory control analysis is the process of analyzing and managing inventory levels to ensure that companies have the right amount of inventory to meet customer demands while minimizing costs.
Q: Why is inventory control analysis important?
A: Inventory control analysis is important because it helps companies to minimize inventory costs, reduce the risk of stockouts, and improve customer satisfaction.
Q: What are the benefits of inventory control analysis?
A: The benefits of inventory control analysis include:
- Reduced inventory costs
- Improved customer satisfaction
- Reduced risk of stockouts
- Improved supply chain efficiency
- Increased profitability
Q: What are the different methods of inventory control analysis?
A: There are several methods of inventory control analysis, including:
- Decomposition forecasting method
- Economic Order Quantity (EOQ) method
- ABC analysis
- VED analysis
- Just-in-time (JIT) inventory management
Q: What is the decomposition forecasting method?
A: The decomposition forecasting method is a statistical method that breaks down data into seasonal components, trends, and cycles to estimate future demand.
Q: What is the Economic Order Quantity (EOQ) method?
A: The EOQ method is a mathematical method that calculates the optimal order quantity to minimize inventory costs.
Q: What is the ABC analysis?
A: The ABC analysis is a method that categorizes inventory items into three categories: A (high-value, high-demand items), B (medium-value, medium-demand items), and C (low-value, low-demand items).
Q: What is the VED analysis?
A: The VED analysis is a method that categorizes inventory items into three categories: Vital (essential items), Essential (important items), and Desirable (nice-to-have items).
Q: What is just-in-time (JIT) inventory management?
A: JIT inventory management is a method that aims to produce and deliver products just in time to meet customer demands, minimizing inventory levels and reducing waste.
Q: How can companies implement inventory control analysis?
A: Companies can implement inventory control analysis by:
- Conducting a thorough analysis of their inventory levels and demand patterns
- Developing a comprehensive inventory management plan
- Implementing a inventory control system
- Monitoring and adjusting inventory levels regularly
Q: What are the challenges of inventory control analysis?
A: The challenges of inventory control analysis include:
- Accurate demand forecasting
- Managing inventory levels
- Minimizing inventory costs
- Ensuring supply chain efficiency
- Managing inventory data
Q: How can companies overcome the challenges of inventory control analysis?
A: Companies can overcome the challenges of inventory control analysis by:
- Implementing a robust inventory management system
- Conducting regular inventory audits
- Developing a comprehensive inventory management plan
- Providing training to inventory staff
- Continuously monitoring and adjusting inventory levels
Q: What are the future trends in inventory control analysis?
A: The future trends in inventory control analysis include:
- Increased use of artificial intelligence and machine learning
- Implementation of blockchain technology
- Increased focus on sustainability and environmental impact
- Increased use of data analytics and visualization
- Increased focus on supply chain resilience and risk management.