Determination of minimum stock on system retail using forecast, economic order quantity and reorder point methods

Abstract

In a globalization era, where retail business competition is getting tougher, a retail business has to have more advantages such as competitive selling prices, stock availability and others. In order to have competitive selling prices, a retail business should be able to arrange planning regarding goods availability to maintain balance between demand and existing stock (supply). The need for information on the availability of stock of goods in accordance with the sales that occur becomes very important. It is needed to avoid the goods accumulated excessively in the warehouse or even shortage of goods. If this kind of information about stocks both in a warehouse or the one that has been sold does not properly provided, it can cause reduction on the company’s profit because it can lead to more expenses on buying other goods as guessing that the stock of certain goods are running low or even more miscalculating to buy more goods that is actually still on the warehouse with sufficient quantities. These kind of situations were often occurred when a retail business do not have a tool to ensure the estimated purchase of stock needed for a certain period of time during selling. Therefore, it is required a system to help facilitate companies in carrying out retail business activities by using the Forecasting Method to help estimate quantitatively what will happen in the future with the stocks, based on relevant data in the past. In accordance with the results of the identification of demand patterns, the Forecasting Method used is Moving Average (MA), Weighted Moving Average (WMA), Single Exponential Smoothing (SES) and Double Exponential Smoothing (DES). After Forecasting, the best Forecast Method which has the lowest Mean Absolute Deviation (MAD) selection is made. This Economic Order Quantity (EOQ) method helps to determine the optimal purchase frequency. Through determining the optimal number and frequency of purchases, then optimal inventory control is obtained. The Reorder Point method can be used to find out what the minimum point is to be able to order a stock back, so that it is expected that the amount of stock that is not excessive and can meet sales needs optimally.