Application of inventory control using economic order quantity (EOQ) method in increasing inventory cost efficiency

Abstract

This research aims to find out whether the EOQ method can minimize inventory costs so as to obtain more efficient total inventory costs. The data used in this research is primary data obtained from company records in 2023 and secondary data. This research is quantitative descriptive research using interview and observation data collection techniques. In addition, data analysis strategies utilizing the total cost, reorder point, and Economic Order Quantity (EOQ) approaches are employed. The study's findings suggest that employing the EOQ method to regulate the supply of soybean raw materials is a more efficient approach than following business policy. With the EOQ method, companies can determine the optimal number of orders and constant purchasing frequency. The total inventory cost using company policy is Rp 2,852,272, while using the EOQ method the total inventory cost is Rp 1,021,757. So by implementing the EOQ method the Company can make savings of Rp 1,830,516.