Feb 06, 2024

[For companies in Indonesia]
Cost and Stock Efficiency in Sustained Increase Inflation

  • Manager Samuel Sianturi
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Since 2020 until now, inflation in Indonesia had increasing trend starting 1.44% in October 2020 to 3.52% in June 2023 (based on bps data) caused by Food and Drink, Transportation, and Foreign Inflation. This inflation impact to all purchase power of consumer goods in Indonesia market. As a result, manufacturing company should balance between their inventory and order time process to get optimum total cost for their cost structure.
To manage equilibrium between balance stock and carrying cost, one of the best solutions is to apply Economic Order Quantity (EOQ) method given such a demand volume situation. The EOQ for inventory management is the optimum amount of total cost in balancing demand and inventory cost.
This document describes in detail EOQ inventory management techniques to gain optimal inventory level given by uncertainty of demand volume by finding optimal order quantity, optimal replenishment time and optimal total relevant cost. As the result manufacturing company will have total Cost and Stock Efficiency in Sustained Increase Inflation with solution in implementation EOQ System, Warehouse Management System (WMS), Milkrun System, Supplier Management System (SRM). By implementing these solutions, manufacturing company can save their inventory and operating cost through Just in time order, Optimum Warehouse Management, trucking delivery and Supplier Management.

* This document was presented in the seminar "Economic order quantity (EOQ) inventory management strategy to cope with low demand-driven situation in high inflation condition" held on December 12, 2023.

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