Evaluation of Inventory Control Policy for Consumable Items of Auxiliary Materials (Case Study in PT Batanghari Barisan)

Octaria, Citra Dewi (2021) Evaluation of Inventory Control Policy for Consumable Items of Auxiliary Materials (Case Study in PT Batanghari Barisan). Diploma thesis, Universitas Andalas.

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Abstract

Generally, every company has an inventory in different quantities and conditions for a certain purpose. Inventory control is needed so that the demand or needs can be fulfilled effectively and efficiently. Based on interviews with Gudang Bahan Penolong employees in PT Batanghari Barisan, the company is still facing several problems in the procurement of consumable items, including spare parts and daily goods. First, there are spare parts that are difficult to predict in terms of time and quantity of uses. Second, orders are usually made for a single item needed. Third, company policy is still based on the estimates of the supervisor. Fourth, most consumable items are overstock and rarely stockout. This research is aimed to evaluate the company's inventory system and propose an inventory control policy for consumable items of auxiliary materials according to the lowest total inventory cost. The method used is ABC analysis for classifying items according to its usage value and criticality. After employing ABC analysis, it is obtained that 20 of 33 consumable items are categorized into Class A and B, which contribute to 94.62% of total usage value. Some approaches are applied to find out inventory policies that can provide the lowest total cost. Monte Carlo simulation is done to predict intermittent demand patterns and justify the company's inventory control policy with a total inventory cost of Rp18,950,782.87. Based on the cost comparison of the inventory control policies, the ordering cost and shortage cost of the proposed policy (Q backorder and Joint Replenishment) is lower than the Monte Carlo simulation of company's policy. However, in terms of holding cost, the company's policy cost is lower than the proposed policy. Using the joint replenishment method, the proposed policy has a potential savings of 58.32% from the company's Monte Carlo simulation and greater than the Q backorder of 50.26%. Thus, Gudang Bahan Penolong Division is supposed to implement a joint replenishment inventory control policy in which items from the same supplier will be ordered every T interval time with the order quantity reaches the maximum inventory level (R).

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