DEMAND FORCASTING For EOQ IN INVENTORY MANAGEMENT OF WOODEN TOYS MANUFACTURE

DEMAND FORCASTING For EOQ IN INVENTORY MANAGEMENT OF WOODEN TOYS MANUFACTURE

Author		: MARHENI EKA SAPUTRI
Published on	: Global Trend in Academic Research 2015

Abstract

The key decision in business both manufacturing and retail is how much inventory to keep on hand. Inventory is important part and usually a business???s largest asset. The instant inventory levels are established, they become an important input to the budgeting system. Inventory decisions involve a delicate balance between ordering costs, holding costs, and shortage costs. Purezento is a Indonesia gift shop company which engaged in the manufacture of wooden toys. Demands in Purezento is increasing every year, but to determine the purchasing decisions or ordering of raw materials is still based on the estimation or prediction of owner. To avoid surplus or shortage of raw materials, forecasting and safety stock will be necessary to manage the procurement of raw material needs. Forecasts of future demand will determine the quantities that should be purchased, produced and shipped. It is necessary that the existence of inventory policies can be applied in the company and will suppress the inventory cost and ordering. Therefore to minimise the inventory cost, EOQ analysis can be applied. Type of Quantitative Descriptive approach is used in this research where the method of data collection is obtained from interview and observation. Conclusion has been made that the implementation of forecasting and EOQ method will assist the company to make a decision regarding their inventory. This method will also help the company in saving cost of raw material and taking control of raw materials which will all lead to support the production activities.