Optimizing Inventory Control System of Crumb Rubber Raw Material: a Case Study

Abstract

Rubber companies often face problems with raw material inventory because obtained from nature. To anticipate shortages of inventory, companies usually buy raw materials in excess quantities. This will result in large inventory costs. This study aims to optimize the inventory control system of crumb rubber raw material in a case rubber company. It started with the demand forecasting of crumb rubber raw material. The level strategy method is then used to determine the production planning of crumb rubber. Finally, the fixed order quantity model is applied to determine the optimal inventory control of crumb rubber raw material. The results show the optimal inventory level of crumb rubber raw material is 988,881 Kg, with a reorder point is 526,570 Kg, and a safety stock is 342,302 Kg. It obtained the total inventory cost is IDR 1,843,689,421 per year. Inventory control is useful for ensuring the smooth production process and preventing excess or shortage of inventory. The results are expected can aid the rubber company in improving inventory control and minimize inventory costs.