Efficiency, Effectiveness, and Profitability: The ABC-EOQ Formula for Success in Mineral Water Inventory Management

Valencio Rafferty Sidharta, Diah Ayu Septi Fauji

Abstract


This paper attempts to offer improvements to the problems faced by the inventory management of mineral water agent retail businesses in Kediri by providing solutions to the main causes of excess inventory. Several popular inventory management techniques such as ABC classification and EOQ to reduce excess stock in warehouses have proven to be quite efficient so they can help in managing inventory effectively and can increase the fluency of business cash flow. This combination of techniques could open the way for new research topics and expand the literature on this subject. This research uses quantitative descriptive methods. Data was obtained from interviews and inventory data. The results of this research also show that for products with the highest demand and consuming 66.31% of capital, inventory can be controlled with EOQ. The calculation results using a combination of the two methods proved to be more efficient. This can be seen by comparing the company's policy with the number of goods ordered in one order of 350 gallons with a frequency of ordering 8 times a year with a total cost of Rp.44,254,740,- while the EOQ method produces a total order of goods of 1,208 gallons with a frequency of ordering 2 times in a year and with total costs incurred amounting to Rp.39,033,490,-.


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