ANALYSIS OF SPARE PART INVENTORY CONTROL USING ECONOMIC ORDER QUANTITY (EOQ) AND CONTINUOUS REVIEW METHODS

General Background: In the concrete manufacturing industry, the reliance on machines for production activities necessitates a robust spare parts inventory management system to ensure operational continuity. Specific Background: However, fluctuating demand for spare parts often leads to overstock or stockout situations, significantly impacting inventory costs and cash flow. Knowledge Gap: Existing studies primarily focus on static inventory management approaches, neglecting the dynamic nature of spare parts demand in manufacturing environments. Aims: This research aims to optimize total inventory costs while determining efficient order and reorder point quantities by integrating the Economic Order Quantity (EOQ) method with continuous review techniques. Results: The findings reveal an optimal order quantity of 131 units and a reorder point of 18 units, resulting in a total inventory cost of IDR 2,414,609,989—an efficiency improvement of IDR 293,152,400, equivalent to an 11% cost saving compared to previous inventory management practices. Novelty: This study innovatively employs a probabilistic approach to account for demand variability, enhancing the accuracy of inventory control measures. Implications: The outcomes suggest that implementing the proposed inventory management strategy can mitigate the risks of overstocking and stockouts, ultimately fostering improved financial performance in the company. Furthermore, the research highlights the necessity for regular inventory reviews and suggests future studies to develop more dynamic inventory control models that incorporate price fluctuations for spare parts, thereby addressing potential risks associated with cost variability.