APPLIED ECONOMIC ORDER QUANTITY (EOQ) INLOGS RAW MATERIAL INVENTORY CONTROL FOR PLYWOOD INDUSTRY

Abstract

One of the most difficult aspect of plywood industry is control inventory. Logs as the main raw material for plywood industry are the first and foremost form of inventory.Without proper planning, a manufacturing company can run out of raw material, negatively impacting the company and its customers. The aim of this study was to evaluate logs raw material inventory control applied at a plywood in South Sulawesi, Indonesia.For the purpose of the study, the data of logs raw material consumption during sixteen years (1996-2011) were collected.In order to find out the demand of logs, data analysis is done periodically (time series data) by using single exponential smoothing model (SES). Mean Absolute Persentage Error (MAPE), Mean Squared Error (MSE)and Mean Absolute Deviation (MAD) are used to measureof logs forecast accuracy. Economic Order Quantity (EOQ) model and Re-order Point (ROP) were used to address the most fundamental question in inventory control how much inventory should be ordered???? and when should be ordered????