Raw materials are one of the most important elements that must be controlled by
every industry or business in order to get the best outcomes. If this element is not
controlled good enough, it can lead to ineffective raw material flow. It may affect
the business in terms of outcomes such as sales. The sales affected can come
from an ineffective inventory control strategy that leads to high total cost or the
inability to fulfill customers’ demand. In other words, when it comes to controlling
raw materials, elements included in total cost such as setup cost, shortage cost,
scrapped cost, and holding cost must be considered. To control these elements,
inventory control method is used considering the order quantity and reorder point
as its variables of the analysis.
The purpose of this research is to apply inventory control knowledge to help The
Rockz Hotdog business, as one of the food industry business in reviewing and
improving its raw material inventory control policy considering the expiry dates and
order lead time of the raw materials. With inventory control application towards the
business, it is hoped it can improve the business’ outcomes such as minimized
total costs and maximized customers’ demand fulfillment rate.
The first step is to collect important data for the analysis, such as past sales data
and supporting data. After that, the past sales data are being classified based on
the amount of demand at certain times. Then, the classified data are put in input
analyzer software in order to help generating random demand values that
correspond to the actual demand data. Then alongside supporting data, the
simulations in Excel software are carried out. These simulations are made to
represent the actual conditions of the business. Then, using inventory control
knowledge, methods are used to find an approximation of optimal solutions for the
business. Then, the optimal solution can be selected between candidates stated
in the simulations.