Analysis Inventory Cost Jona Shop with EOQ Model

Abstract

Jona Shop is located in Indonesia, Jakarta is currently having a problem. The problem is the shop’s owner thinks that the inventory costs are too big especially for a powdered drink which brand is “Nutrisari”. The author finishes an EOQ (Economic Order Quantity) model for minimize the inventory cost. EOQ model is an old model but a valid model which still used now. Even EOQ model is an old model, many researchers used EOQ model to minimize inventory cost until 50% or more than 50%. But the EOQ model has some assumptions and Jona Shop fulfilled all the assumptions in the EOQ model. The assumptions of EOQ model are demand is known and constant, the lead time is constant and known, only one product can be estimated, every order is accepted in one-time delivery and can be used right away, there is no backorder because run out stock, no discount, and the holding cost per year and the ordering cost per year are constant. The result of the EOQ model can save up to almost 90%.