Track: Inventory Management

Abstract

The problem that generally occurs in methanol industry is auxiliary materials stock out, i.e. urea, NPK, and sulfuric acid. This condition leads to the production quantity only reach 75% of the target. Therefore, it is necessary to develop inventory control model so that the production target can be achieved. The estimation of auxiliary materials needs is done by forecasting method with the smallest mean absolute percentage error. Model of continuous review system with backorder case is used for inventory planning and control. With this model, the industry can determine the amount of safety stock and reorder point to avoid the risk of stock out or excess of raw materials so it can minimize the total inventory cost. The result shows that the model can reduce the total inventory cost up to 12,02% in the next one year planning period.