Raw material inventory control analysis with economic order quantity method

Abstract

The purpose of this research is to minimize the total cost of raw material inventory more economically in accordance with the production needs. Economic Order Quantity is the method used to support this research. For this purpose, this method generates total inventory cost consisting of a minimum ordering cost and carrying cost. From this result, the inventory level and the number of raw material demand become more economic suitable with the production needs. It is because this method applies two types of cost, carrying cost and ordering cost that make the total inventory cost become more economically. So, this method can use to get the most economical total inventory cost and reduce storage cost swelling.