Economic order quantity determination model

Abstract

Order processing and inventory management are critical to inventory costs. Therefore, this research aims to reduce cost and lead time for case study construction material retailer. The objectives are to 1) study the order processing and inventory management of construction material retailer; and 2) to study inventory analysis techniques in decision making to determine the appropriate order quantity. 30 employees are interviewed for collecting data and a case study company inventory raw material data from January – December, 2021 is used as data. ABC analysis and EOQ are used to calculate quantities for the right order and quantities as the high demand. The data in the analysis is collected from samples of products that are important to production process, high value and high demand. The result of comparison between a case study of construction materials retailer’s inventory management model and ABC analysis and EOQ approach in group “A” material found that EOQ obtain cost 2,404,148.24 Baht and a case study of construction materials retailer’s inventory management model obtain cost 3,314,648.93 Baht. Therefore, EOQ saves cost than a case study of construction materials retailer’s inventory management model for 910,500.69 Baht per year.