Raw Material Inventory Control Using the Economic Order Quantity Model

Abstract

This study examines raw material inventory control using a secondary analysis of published wood-demand and cost data from PT Jatisari Furniture Work. The dataset covers November 2018 to February 2020 and reports demand of 272.28 cubic metres, an ordering-cost input of IDR 1,427,500, and a holding-cost input of IDR 34,082 per cubic metre. The analysis reproduces the economic order quantity calculation, checks the cost components, and distinguishes the continuous model solution from an implementable ordering schedule. Under a common 16-month cost basis, the calculated order quantity is 151.0248 cubic metres, with ordering and cycle-stock holding costs of IDR 2,573,614.34 each. Including the reported safety stock of 0.1868 cubic metres gives a modeled relevant inventory cost of IDR 5,153,595.20. These results depend on treating the published cost allocations as model parameters. The reported safety stock also relies on monthly dispersion and does not establish a verified daily service level. The analysis provides a reproducible cost benchmark, while identifying the cost definitions and demand observations needed before operational adoption. Actual cost savings and stockout prevention cannot be established from this calculation alone.