Raw Material Inventory Optimization with Long Leadtime

Abstract

Inventory management is an essential component in supporting production. Factories must implement inventory control to achieve the desired productivity. Material shortages disturb production, while material excess makes spending soar. To prevent these problems, this study aims to analyze raw material requirements and inventory control management at a factory. This paper compares the classic economic order quantity (EOQ) model and Monte Carlo simulation and optimization considering random elements. The order quantity and the reorder point will be obtained using both methods. The results show that the Monte Carlo simulation produces lower inventory costs.