Abstract
The research aims to determine the optimal order quantities of raw materials using Economic Order Quantity (EOQ), the total cost of raw material inventory, reorder point, order frequency, and application of the EOQ method on the CV. XYZ Kupang in an effort to optimize inventory costs. The data used in this study consisted of primary data and secondary data both qualitatively and quantitatively related to raw material supply. Primary data were obtained through direct observation and interviews with various key respondents at CV. XYZ Kupang. Secondary data were obtained from the documents and reports from Management Company. The results of this study indicate that the optimal quantity of raw material orders at CV. XYZKupang is 63.80 m3 in 2017, 63.04 m3 in 2018, and 72.80 m3 in 2019. The total cost of the company’s raw material supply that issued if EOQ policy appliedRp. 32.267.554 in the year 2017, Rp. 24.507.185 in the year 2018, and Rp. 28.020.251 in the year 2019.CV. XYZ Kupang must perform an order back in the level of inventories of 16.74 m3 in 2017, at 10.08 m3 in 2018, and 9.82 m3 in 2019.6.90 m3 in 2017, 6.20 m3 in 2017, and 5.75 m3 in 2019. CV. XYZ Kupang had to order as many as 9 times in the year 2017, 8 times in the year 2017, and 8 times in the year 2019. Thus the number of all bookings in the year 2017 of 7.09 m3, by the year 2018 of 7.88 m3 and in the year 2019 of 9.1 m3.CV. XYZ Kupang can optimize the cost of supplies, neither order of the cost of storage. If EOQ method applied, there is a saving from the total cost of the inventory in the year 2017 is Rp. 72.523.229, by the year 2018 is Rp. 68.476.912, and in 2019 is Rp. 76.468.558.
Highlights
Good production process requires a balance between factors of production, which includes raw materials, machine, capital, methods, and human resources
Economic Order Quantity (EOQ) method is often used because it is easy to be implemented and able to provide the best solution for the company
This is evidenced by using the EOQ method, it is known what amount of inventory is the most efficient for the company, if inventory accumulates too much it affects the quality of goods and if it too little inventory will affect the level of sales
Summary
Background Good production process requires a balance between factors of production, which includes raw materials, machine, capital, methods, and human resources. EOQ method is often used because it is easy to be implemented and able to provide the best solution for the company. This is evidenced by using the EOQ method, it is known what amount of inventory is the most efficient for the company, if inventory accumulates too much it affects the quality of goods and if it too little inventory will affect the level of sales. Inventories make a large contribution to revenue because the efficiency of inventory costs can reduce inventory, but it will be known that the costs incurred by the company in connection with the inventory of raw materials (calculated as Inventory Cost) and the most appropriate time to make a buyback (calculated by Reorder Point)
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