Analysis of Raw Material Ordering with Economic Order Quantity Method

Abstract

The objective of this study is to create more recommendations and purchases of raw material in each period. This research method used Economic Order Quantity (EOQ) method. This method is one of many methods for supply management, to avoid shortage or surplus raw material which used for production. This study result the number of ideal raw material amount which use for production. The result was gained from the calculation of ordering and storage cost, where the ordering cost is a cost per one order and storage cost is a cost for each unit material per period. Other than that, this method also determine a forecasting based on total amount of the order that would be produced. Certainly, the result of forecasting is very helpful for the company to order raw material which corresponding to the production, so that could decrease the loss of ordering and storage cost due to the excess purchase of these raw materials.