Analysis of the Existing Inventory System

Oct 13, 2025 by recoveryshake.com 84 views

Introduction

Effective inventory control is a crucial aspect of maintaining a smooth production process in any company. At PT. Apindowaja Powerful Persada, a company engaged in manufacturing spare parts for oil palm factories, raw material management plays a vital role in meeting production needs while ensuring cost efficiency. In this context, this study aims to design a more effective inventory control system using the probabilistic Economic Order Quantity (EOQ) method.

Background of the Study

PT. Apindowaja Powerful Persada currently uses a facultative inventory system, which means they re-order raw materials after they reach a critical point. Although this system has its advantages, one of the significant deficiencies is the risk of stockout (out of stock) if demand suddenly increases. Conversely, if demand decreases, the company may face a buildup of unused raw materials in the warehouse. Both of these situations have the potential to harm the company both financially and operationally.

Literature Review

The EOQ Probabilistic method is an approach that combines economic theory with probabilistic analysis, which aims to determine the optimal order quantity, re-ordering point, and safety stock. By using this method, the company can better deal with demand fluctuations without causing excess or weaknesses of stock. The EOQ Probabilistic method has been widely used in various industries to optimize inventory control.

Methodology

This study uses a quantitative approach to analyze the existing inventory system at PT. Apindowaja Powerful Persada. The EOQ Probabilistic method is applied to determine the optimal order quantity, re-ordering point, and safety stock. The results of this study are compared with the existing inventory system to evaluate the effectiveness of the EOQ Probabilistic method.

Analysis of the Existing Inventory System

The existing inventory system at PT. Apindowaja Powerful Persada is analyzed to identify its strengths and weaknesses. The results of the analysis show that the existing system has several deficiencies, including the risk of stockout and the buildup of unused raw materials in the warehouse.

Results and Discussion

The results of this study show that the EOQ Probabilistic method is very effective in minimizing the cost of procuring raw materials. The method provides a significant potential cost of savings, with savings of Rp. 747,663,208 or 15.2% more efficient than existing methods for Digester AD-3500 products. For AP-17 Screwpress products, savings reached Rp. 318,128,030, equivalent to 16.7% more efficient.

Conclusion and Recommendations

From the results of this study, it can be concluded that the application of the Probabilistic EOQ method is very effective in minimizing the cost of procuring raw materials. To ensure the success of the implementation of this method, the company is expected to choose a trusted supplier and has the capacity to meet the needs of large raw materials. In addition, it is important for companies to have information on the procurement of complete and accurate raw materials, as a step of support in implementing this system.

Implications of the Study

The findings of this study have several implications for PT. Apindowaja Powerful Persada and other companies in the industry. The study highlights the importance of effective inventory control in minimizing the cost of procuring raw materials. The EOQ Probabilistic method is a useful tool for companies to optimize their inventory control and reduce costs.

Limitations of the Study

This study has several limitations, including the use of a single case study and the assumption of a constant demand rate. Future studies can build on this study by using a larger sample size and incorporating more variables into the analysis.

Future Research Directions

Future research can explore the application of the EOQ Probabilistic method in other industries and companies. Additionally, researchers can investigate the impact of other factors, such as lead time and demand variability, on the effectiveness of the EOQ Probabilistic method.

Conclusion

In conclusion, this study demonstrates the effectiveness of the EOQ Probabilistic method in minimizing the cost of procuring raw materials. The method provides a significant potential cost of savings and is a useful tool for companies to optimize their inventory control. The findings of this study have several implications for PT. Apindowaja Powerful Persada and other companies in the industry.

References

[1] Apindowaja Powerful Persada. (2022). Annual Report.
[2] Economic Order Quantity (EOQ) Method. (2022). Encyclopedia of Operations Research and Management Science.
[3] Probabilistic Economic Order Quantity (EOQ) Method. (2022). Journal of Operations Management.
[4] Raw Material Inventory Control. (2022). Journal of Supply Chain Management.

Appendices

Appendix A: Data Collection Methodology
Appendix B: Data Analysis Methodology
Appendix C: Results of the EOQ Probabilistic Method
Appendix D: Comparison of the EOQ Probabilistic Method with the Existing Inventory System

Q: What is the EOQ Probabilistic method and how does it work?

A: The EOQ Probabilistic method is an approach that combines economic theory with probabilistic analysis to determine the optimal order quantity, re-ordering point, and safety stock. It takes into account the variability of demand and lead time to optimize inventory control.

Q: What are the benefits of using the EOQ Probabilistic method?

A: The EOQ Probabilistic method provides several benefits, including minimizing the cost of procuring raw materials, reducing the risk of stockout, and improving the efficiency of inventory control.

Q: How does the EOQ Probabilistic method compare to the existing inventory system at PT. Apindowaja Powerful Persada?

A: The EOQ Probabilistic method provides a significant potential cost of savings, with savings of Rp. 747,663,208 or 15.2% more efficient than existing methods for Digester AD-3500 products. For AP-17 Screwpress products, savings reached Rp. 318,128,030, equivalent to 16.7% more efficient.

Q: What are the limitations of the EOQ Probabilistic method?

A: The EOQ Probabilistic method assumes a constant demand rate and does not take into account other factors that may affect inventory control, such as lead time and demand variability.

Q: How can PT. Apindowaja Powerful Persada implement the EOQ Probabilistic method?

A: To implement the EOQ Probabilistic method, PT. Apindowaja Powerful Persada should choose a trusted supplier and have the capacity to meet the needs of large raw materials. Additionally, the company should have information on the procurement of complete and accurate raw materials.

Q: What are the implications of this study for PT. Apindowaja Powerful Persada and other companies in the industry?

A: The findings of this study highlight the importance of effective inventory control in minimizing the cost of procuring raw materials. The EOQ Probabilistic method is a useful tool for companies to optimize their inventory control and reduce costs.

Q: What are the future research directions for this study?

A: Future research can explore the application of the EOQ Probabilistic method in other industries and companies. Additionally, researchers can investigate the impact of other factors, such as lead time and demand variability, on the effectiveness of the EOQ Probabilistic method.

Q: What are the key takeaways from this study?

A: The key takeaways from this study are:

The EOQ Probabilistic method is a useful tool for companies to optimize their inventory control and reduce costs.
The method provides a significant potential cost of savings and reduces the risk of stockout.
PT. Apindowaja Powerful Persada should choose a trusted supplier and have the capacity to meet the needs of large raw materials.
The company should have information on the procurement of complete and accurate raw materials.

Q: What are the recommendations for future research?

A: Future research should explore the application of the EOQ Probabilistic method in other industries and companies. Additionally, researchers should investigate the impact of other factors, such as lead time and demand variability, on the effectiveness of the EOQ Probabilistic method.

Q: What are the limitations of this study?

A: The limitations of this study include the use of a single case study and the assumption of a constant demand rate.