Optimization of raw material inventory control through the implementation of the Economic Order Quantity Method: a case study at UD. Suwarno Bamboo Weaving Industry

Abstrak

Efficient inventory control is a critical factor in maintaining cost-effective production, especially for small and medium-sized enterprises (SMEs) such as UD. Suwarno, a bamboo weaving industry in North Sumatra, is a prime example of this phenomenon. The company has historically relied on unstructured ordering based on customer demand, which frequently results in either excessive stock or emergency procurement, thereby increasing total inventory costs. The objective of this research is to analyze the company's current inventory system and apply the Economic Order Quantity (EOQ) method as a quantitative solution to optimize raw material procurement. The study employs a descriptive quantitative approach, grounded in primary data from observations and interviews, complemented by secondary data sources such as purchasing records and inventory expenses. The primary benefit of this research is its capacity to assist SMEs in implementing a systematic inventory management approach and achieving cost minimization by employing the EOQ method. The novelty of this study lies in its application of the EOQ model to the context of a traditional bamboo craft business, a subject that has been largely overlooked in extant literature. The findings indicate that implementing the EOQ method results in an optimal ordering quantity of 3,885 sticks per order and a reorder point of 288 sticks. This strategy led to a significant reduction in total inventory costs, from Rp 242,100,000 to Rp 83,462,136 per year, representing a cost saving of approximately 66%. Therefore, the results of this study demonstrate that the EOQ model is an effective tool for improving inventory efficiency and sustainability in traditional craft-based SMEs