IMPLEMENTING ECONOMIC ORDER INTERVAL FOR MULTIPLE ITEMS TO REDUCE TOTAL INVENTORY COST

Nowadays inventory management has become a major concern for company because it can bring value added. Inventory management focuses on maintaining and managing the inventory level in order to fulfill the customer’s demand with the lowest cost. In retailing and wholesaling, multiple items from the same supplier are jointly ordered. It means that the order interval of each item must be the same. However, there are several manufacturing companies that have not achieved the optimum solution in inventory management for multiple items. It leads them to increase the total inventory cost which are most caused by improper order interval. Thus, appropriate inventory management may reduce the total inventory cost. This research tried to identify this problem. The first step that should be done was identifying the problems, scopes, and objectives of the research aimed to minimize the inventory control management. After that we collected data and analyzed the supported data in inventory management using the total inventory cost analysis as a parameter in comparing the actual system and the proposal system. This research also implemented forecasting methodology to predict the future demand. In the final section, we implemented the economic order interval in order process for determining the optimum order interval. The result showed that the proposal system can reduce the total inventory cost over 21% from the current condition.