Stock Out Analysis: An Empirical Study on Forecasting, Re-Order Point and Safety Stock Level at PT Combiphar, Indonesia
RIBER: Review of Integrative Business and Economics Research, Vol. 3, Issue 1, March 2014, p. 52-64, ISSN: 2304-1013
13 Pages Posted: 11 Mar 2014
Date Written: March 1, 2014
Inventory is one of the most important assets in the companies, especially in manufacturing company. In the event of problems related to inventory, the company's business processes will be disrupted. One example of the inventory problems is stock out case. Stock out is a condition in which the company is unable to meet customer demand due to inventory shortage in the warehouse. This problem is common in manufacturing companies which adapted make to stock system, for example pharmaceutical companies. PT. Combiphar is one of the pharmaceutical company in Indonesia that adapting the system. With this system, the company is required to perform demand forecasting to avoid shortages or excess inventory in the future. Another thing that must be determined by the company is the re-ordering time and safety stock levels in anticipation of stock out in the warehouse due to the long lead time.
Inventory management is an important aspect in supply chain management which can adjust level of inventory in the warehouse taking into costs such as: ordering cost, carrying cost and item cost. Inventory is needed to anticipate the stock out, avoid the price and lead time uncertainty. Economic Order Quantity (EOQ) is one of the inventory models that calculate the maximum inventory level to be ordered at the lowest cost.
This study uses quantitative method, includes: forecasting calculation with double exponential smoothing models to determine the level of demand in 2013 and 2014, determining the re-order point and safety stock level to know when company have to order and how much inventory is anticipated, also EOQ calculations to know how many orders of raw materials at the lowest cost.
Keywords: Inventory, Supply Chain Management, Stock Out, Make to Stock, Forecasting, Lead Time, Re-Order Point, Safety Stock, Economic Order Quantity
JEL Classification: M00, M10, M11, M20, O00, R30
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