chapter 4 research analysis and outcome 4.1 4.1.1...

38

CHAPTER 4

RESEARCH ANALYSIS AND OUTCOME

4.1 Research Object

4.1.1 Company Profile

Mulia Mart is a minimart established in 2012. At the beginning, Mulia Mart

only opens in Yogyakarta. After a while, they open new branches in Bandung and

then Jakarta. Mulia Mart started off with a concept of mini traditional market. They

initially sell vegetables, fruits, meat and other traditional dairy while also sells daily

needs as all market does.

Because of the bad market responses, in 2014 Mulia Mart changed the initial

concept to become a mini mart in general. Until today, Mulia Mart have been selling

daily needs and other product in general like drinks, snacks, and cigarettes.

The company has a vision of becoming the affordable minimart for all element of

society, especially for the lower-middle class. The mission that the company have

is to serve customers more flexibly just like in traditional market, and also to build

a good relation with customers.

4.1.2 Job Roles and Descriptions

Mulia Mart didn’t provide organizational structure, but did provide job

descriptions of the roles in Mulia Mart. They are:

39

No. Role Job Description

1. Store Head Supervise items that will be sold

Regulate shifts for all employee

Supervise performance

Responsible for the general operations.

2. Cashier Keeping the computer and printer working

well

Book the sales

Make the calculation of sales

3. Clerk Keeping the display and storage items tidy

Doing the control function to all items

Serves customers and give the information

needed.

4.2 Inventory Control in Mulia Mart

Inventory control in Mulia Mart is not good enough. Any activity regarding

inventory is dependent to Mulia Mart’s store head. Sometimes it is just depending

to the storehead’s instinct to decide the number of items that will be ordered on

every period. That means Mulia Mart has not applied the right calculation method

for their inventory control.

Mulia Mart applies naïve approach or ordering periodically with the same

quantity every month. The fact the store is run by the store head without any

sufficient knowledge had caused the inventory control managed poorly. Inventory

ordering is not followed by safety stock setting so sometimes the product can be

unavailable at the store. This would affect the income of Mulia Mart and the cost

incurred would be big because Mulia Mart could not cope with the demand level.

40

The facts show how ineffective the inventory control exist in Mulia Mart.

Thus, a good inventory control needs to be implemented to give the best benefit to

Mulia Mart. Below is the table that shows the frequency and quantity of inventory

ordering in Mulia Mart:

Table 4.1 Mulia Mart sales data 2017

Product

Total

Sales

(unit)

Order

Frequency

in a year

Quantity

per

order

(unit)

Total

Order

(unit)

Final

Inventory

(unit)

KAPAL API

MIX 25gr

21,913 24 1000 24000 2087

SAMPOERNA

MILD 16

21,285 22 1000 22000 715

PUCUK

HARUM

JASMINE

350ml

15,403

15 1200 18000 2597

Indomie

Goreng

15,277 36 520 18720 2723

COFFEMIX

SACHET 20gr

11,392 30 400 12000 608

Total 85270 8730

Source: Interview Result

4.2.1 ABC Analysis in Mulia Mart

As minimarket in general, Mulia Mart have thousands of kinds of products

like food, beverage, medicine, stationary, toiletries and etc. The kind of product that

is very impactful to the company is the fast-moving product whereas the product is

fast to be sold and doesn’t need to much time to keep in the storage. The product

41

kinds which are classified as fast-moving product are food and beverage. To limit

the research, 20 most-impactful items have been chosen to become this research

object, and they are:

No Item (I) Item Sold

(D) Price (p)

1 Kapal Api Mix 25gr 21913 11500

2 Sampoerna Mild 16 21285 22500

3

Pucuk Harum Jasmine

350ml

15403 3500

4 Indomie Goreng 15277 2200

5 Coffeemix Sachet 20gr 11392 11000

6 Luwak White Coffee 20gr 11331 12900

7 Aqua 600ml 11303 3300

8 Beras Jeruk per 1 liter 9614 12000

9 Aqua 1500ml 8348 5500

10 VIT 600ml 8177 3000

11 Telor Ayam 7747 1600

12 VIT 1500ml 7639 5000

13 Indomie Soto 7605 2200

14 Frisian Flag Krimer 42gr 7603 7800

15 Indomie Kari Ayam 7567 2150

16 Gudang Garam Filter 12 7390 14000

17 Aqua Galon Refill 19 liter 7191 18000

18 Tolak Angin Cair 5933 10000

19 Nestle Pure Lite 600ml 5467 3300

20 Bear Brand 189ml 5425 5000

From the twenty products, a classification will be made using ABC method

to see which product can be classified as class A, class B or class C. Besides, it will

also be determined which products are categorized as fast, moderate and slow-

moving product. The result could be seen below:

42

No Item (I) Number

Sold (D)

% from

total

revenue

Cumulative

Percentage

ABC

Category

1 Sampoerna Mild 16 21285 26.7 40.8 A

2 Kapal Api Mix 25gr 21913 14.1 14.1 A

3 Luwak White Coffee 20gr 11331 8.2 60.8 A

4 Aqua Galon Refill 19 liter 7191 7.2 94.2 A

5 Coffeemix Sachet 20gr 11392 7.0 52.6 A

6 Beras Jeruk per 1 liter 9614 6.4 69.3 A

7 Gudang Garam Filter 12 7390 5.8 87.0 A

8 Tolak Angin Cair 5933 3.3 97.5 A

9 Frisian Flag Krimer 42gr 7603 3.3 80.3 A

10 Pucuk Harum Jasmine 350ml 15403 3.0 43.8 A

11 Aqua 1500ml 8348 2.6 71.8 A

12 VIT 1500ml 7639 2.1 76.0 B

13 Aqua 600ml 11303 2.1 62.9 B

14 Indomie Goreng 15277 1.9 45.6 B

15 Bear Brand 189ml 5425 1.5 100.0 B

16 VIT 600ml 8177 1.4 73.2 B

17 Nestle Pure Lite 600ml 5467 1.0 98.5 B

18 Indomie Soto 7605 0.9 77.0 C

19 Indomie Kari Ayam 7567 0.9 81.2 C

20 Telor Ayam 7747 0.7 73.9 C

After that, the above products are categorized based on how it moves:

No Item (I) Number

Sold (D)

% from

total

item

sold

Cumulative

Percentage Category

1 Kapal Api Mix 25gr 21913 10.8 10.8 fast moving

2 Sampoerna Mild 16 21285 10.5 21.2 fast moving

3 Pucuk Harum Jasmine 350ml 15403 7.6 28.8 fast moving

4 Indomie Goreng 15277 7.5 36.3 fast moving

5 Coffeemix Sachet 20gr 11392 5.6 41.9 fast moving

6 Luwak White Coffee 20gr 11331 5.6 47.4 fast moving

7 Aqua 600ml 11303 5.6 53.0 fast moving

8 Beras Jeruk per 1 liter 9614 4.7 57.7 fast moving

9 Aqua 1500ml 8348 4.1 61.8 fast moving

10 VIT 600ml 8177 4.0 65.8 moderate moving

43

11 Telor Ayam 7747 3.8 69.6 moderate moving

12 VIT 1500ml 7639 3.8 73.4 moderate moving

13 Indomie Soto 7605 3.7 77.1 moderate moving

14 Frisian Flag Krimer 42gr 7603 3.7 80.9 moderate moving

15 Indomie Kari Ayam 7567 3.7 84.6 moderate moving

16 Gudang Garam Filter 12 7390 3.6 88.2 slow moving

17 Aqua Galon Refill 19 liter 7191 3.5 91.7 slow moving

18 Tolak Angin Cair 5933 2.9 94.7 slow moving

19 Nestle Pure Lite 600ml 5467 2.7 97.3 slow moving

20 Bear Brand 189ml 5425 2.7 100.0 slow moving

Total 209145 100

Finally, ABC classification and movement category are combined becomes:

44

No Item (I) Item Sold

(D) Item Sold Percentage % from total revenue

Cumulative

Percentage ABC Category Moving Category

1 Sampoerna Mild 16 21285 10.5 14.1 14.1 A Fast moving

2 Kapal Api Mix 25gr 21913 10.8 26.7 40.8 A Fast moving

3

Luwak White Coffee

20gr

11331 5.6 3.0 43.8

A Fast moving

4

Aqua Galon Refill 19

liter

7191 3.5 1.9 45.6

A slow moving

5 Coffeemix Sachet 20gr 11392 5.6 7.0 52.6 A Fast moving

6 Beras Jeruk per 1 liter 9614 4.7 8.2 60.8 A Fast moving

7

Gudang Garam Filter

12

7390 3.6 2.1 62.9

A Slow moving

8 Tolak Angin Cair 5933 2.9 6.4 69.3 A Slow moving

9

Frisian Flag Krimer

42gr

7603 3.7 2.6 71.8

A moderate moving

10

Pucuk Harum Jasmine

350ml

15403 7.6 1.4 73.2

A Fast moving

11 Aqua 1500ml 8348 4.1 0.7 73.9 A Fast moving

12 VIT 1500ml 7639 3.8 2.1 76.0 B Moderate moving

13 Aqua 600ml 11303 5.6 0.9 77.0 B Fast moving

14 Indomie Goreng 15277 7.5 3.3 80.3 B Fast moving

15 Bear Brand 189ml 5425 2.7 0.9 81.2 B Slow moving

16 VIT 600ml 8177 4.0 5.8 87.0 B Moderate moving

17 Nestle Pure Lite 600ml 5467 2.7 7.2 94.2 B Slow moving

18 Indomie Soto 7605 3.7 3.3 97.5 C Moderate moving

19 Indomie Kari Ayam 7567 3.7 1.0 98.5 C Moderate moving

20 Telor Ayam 7747 3.8 1.5 100.0 C Moderate moving

Total 207.685 100 100

45

From the 20 products listed, 4 products will be selected to be analyzed on its inventory

control. The criteria for selecting 4 products is by looking at the greatest revenue contribution

(A class) of the fast-moving category. Revenue percentage means the percentage of the revenue

generated from an item from the total revenue the company has. The higher percentage an item

has means that the item is very powerful towards the company’s inventory cost, by quantity or

by the price.

From the assumption stated, 4 products are selected below:

1. Kapal Api Mix 25gr

2. Sampoerna Mild 16 f

3. Luwak White Coffee 20gr

4. Coffeemix Sachet 20gr

4.2.2 Inventory Cost Analysis

Inventory cost is a cost incurred by a firm for procurement. In a retail or merchandising

company, inventory cost includes order cost and storage cost.

Order cost

Inventory order that Mulia Mart does is done periodically, accordingly to the agreement

between supplier and Mulia Mart. The supplier differs for each product, and they are:

1. Kapal Api Mix 25gr – PT Fastrata Buana

2. Sampoerna Mild 16 – PT HM Sampoerna tbk.

3. Luwak White Coffee 20gr – PT Fastrata Buana

4. Coffeemix Sachet 20gr – PT Fastrata Buana

Mulia Mart does the ordering periodically, so there are no telephone bills incurred as a

part of the cost. The delivery is at the supplier’s service so Mulia Mart also doesn’t have any

46

delivery cost, including insurance and tax. The only cost incurred is salesman cost, for doing

all the checking and recording. The salesman cost is at Rp 10,000/order. This goes along with

the frequency of order of each product.

Kapal Api Mix 25gr, Luwak White Coffee 20gr and Coffeemix Sachet 20 gr are ordered

twice every month, so does Sampoerna Mild 16 but there are some cancelled orders along the

process. The complete picture of the order frequency of each product can be found on the table

below.

Table 4.2 Order Frequency

Product Name Annual Order

Frequency

Salesman Fee

per order (Rp) Order Cost (Rp)

Kapal Api Mix

25gr 24 10,000 240,000

Sampoerna Mild

16 22 10,000 220,000

Luwak White

Coffee 20gr 24 10,000 240,000

Coffeemix Sachet

20gr 24 10,000 240,000

Total Cost 940,000

Source: Interview Result

Along the way, there are some extra order due to the increase of demand. The orders

are happened outside the scheduled periodic order. The orders are happened unintended, so

based on the interview with the store manager, the cost incurred is different. The cost is not

based on the salesman, but it is based on the fuel and distance. Basically, the cost is incurred

to the truck service delivery so it is dependent to the distance of the supplier. The extraordinary

orders are happened a few days before Idul Fitri feast. The details of the cost are as follows:

47

Table 4.3 Additional Order Cost Mulia Mart 2018

Product Frequency

Supplier

Distance

(km)

Fuel Cost

per 10 km

(Rp)

Total Cost

Kapal Api

Mix 25gr - 15 6,550 -

Sampoerna

Mild 16 3 20 6,550 39,300

Luwak White

Coffee 20gr 2 15 6,550 19,650

Coffeemix

Sachet 20gr 2 15 6,550 19,650

Total 7 78,600

Source: data analysis

So, the total order cost in a year will be:

Order cost = 940,000 + 78,600 = Rp 1,018,600

Storage Cost

Storage cost includes storage depreciation cost and electricity cost. The storage value

of Rp 50,000,000 is depreciated for 10 years period. Using straight line depreciation method,

it is calculated that annual depreciation value of the storage is Rp 5,000,000. The products that

are stored inside the storage is only Coffeemix Sachet 20gr. Meanwhile, Sampoerna Mild 16,

Kapal Api Mix 25gr and Luwak White Coffee 20gr are put directly on the display shelves. The

space usage in the storage for Coffeemix Sachet 20gr is 4% of the total storage space. So, the

depreciation value of the storage for Coffeemix Sachet 20gr in a year is Rp 200,000.

The electricity cost incurred in Mulia Mart is for the lamp and beverage fridge and for

the fan usage. The total cost for electricity is Rp 400,000 per month. The estimation of the

detailed cost for electricity is Rp 100,000 for the electricity in the storage, Rp 300,000 for lamp,

fridge and also fan. So the total annual electricity cost in Mulia Mart is Rp 4,800,000.

48

The maintenance cost for the display shelves is Rp 20,000/month. The form of the

maintenance is routine cleaning and checking every single week. So the total cost for a year is

Rp 240,000.

Capital cost is a cost that is incurred to get some capital, be it from stock or debt. Mulia

Mart gets their capital cost from bank loan, that will become the investment on inventory. From

the interview, it is known that the interest rate from the Bank is 5% annually.

Table 4.4 Mulia Mart Capital Cost on each of the four products

Product Name Price

(Rp)

Sales

(unit)

Final Stock

(unit)

Average

Stock

(unit)

Inventory

Value (Rp)

Interest

Rate

Capital

cost

(Rp)

Kapal Api Mix

25gr

11500 21913 2087 826 9,499,000 0.05 474,950

Sampoerna

Mild 16

22500 21285 715 935 21,037,500 0.05 1,051,875

Luwak White

Coffee 20gr 12900 11331 669 445 5,740,500 0.05 287,025

Coffeemix

Sachet 20gr 11000

11392 608 450 4,950,000 0.05 247,500

Total 65921 4079 2656 41,227,000 2,061,350

Source: Data analysis

Total storage cost for the 5 products of Mulia Mart can be found in the table below:

Table 4.5 Storage Cost

Storage Depreciation Rp 200,000

Electricity Rp 4,800,000

Maintenance Rp 240,000

Capital Rp 2,061,350

Total Storage Cost

Rp7,301,350


49

The total storage cost above is an accumulation of the total storage cost of the four products.

The storage cost per unit can be calculated using this formula:

= 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑉𝑎𝑙𝑢𝑒

𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑣𝑎𝑙𝑢𝑒 𝑥 𝑡𝑜𝑡𝑎𝑙 𝑠𝑡𝑜𝑟𝑎𝑔𝑒 𝑐𝑜𝑠𝑡

So, the total storage cost per product can be seen in the table below:

Table 4.6 Storage Cost Per Product

Product Name

Inventory

Value

(Rp)

Storage Cost

(Rp)

Storage

Cost Per

Unit

(Rp)

Final Stock

(unit)

Total Storage

Cost (Rp)

Kapal Api Mix 25gr 9,499,000 1,682,284.03 76.77 2087 160,218.99

Sampoerna Mild 16 21,037,500 3,725,765.9 175.04 715 125,154.6

Luwak White Coffee

20gr 5,740,500 1,016,649.28 89.72 1152

103,357.44

Coffeemix Sachet

20gr 4,950,000 876,650.80 76.95 1436

110,500.2

Total 41,227,000 7,301,350 7136 499,231.23

Souce: data analysis

From the table 4.6, the total storage cost of Mulia Mart in one year is Rp 499,213.23

Total Inventory Cost in Mulia Mart

Based on Mulia Mart’s data, the total inventory cost will be:

Total inventory cost = order cost + storage cost

= Rp 1,018,600 + Rp 499,213.23

= Rp 1,517,813.23

So, the total inventory cost for the four products for the period of January to December

2018 is Rp 1,517,813.23 The huge portion of order cost plays a big role on creating the total

inventory cost. This is caused by the ordering process that Mulia Mart does is not effective.

50

The fluctuated demand affected Mulia Mart. Mulia Mart couldn’t have the accurate

inventory quantity. That makes it Mulia Mart need the correct forecasting method to forecast

the demand in Mulia Mart for the year 2016 to keep the inventory level stable. An accurate

demand forecast will reduce the overall inventory cost. That’s why a forecasting is needed

throughout the four products for the next one-year period.

4.3 Forecasting of 4 Products

The forecasting for Mulia Mart’s 4 products uses five different methods, which are

Least Square method, Exponential Smoothing, Exponential Smoothing with Trend, Moving

Average Method and Weighted Moving Average method. After all the calculations are done

using the five methods, the one with the smallest Mean Squared Error will be selected. The

data acquired for this analysis is the data from January 2018 to December 2018.

4.3.1 Forecasting of Kapal Api Mix 25gr Mulia Mart

The following table is the sales of Kapal Api Mix 25gr in Mulia Mart during January

2018 to December 2018 period.

Table 4.7 Kapal Api Mix 25gr Sales

Month Sales (unit)

January 2018 2,026

February 2018 1910

March 2018 1626

April 2018 1700

May 2018 1800

June 2018 2009

July 2018 1685

August 2018 1852

September 2018 1826

October 2018 1853

51

November 2018 1700

December 2018 1926

Total 21,913

Source: interview result (2018)

52

According to the sales data, the trend graph should look like this:

Figure 4.1 Kapal Api Sales Trend

From the chart, it is known that the sales of Kapal Api have a cyclic trend. The forecasting

method that are used for cyclic trend are Simple Exponential Smoothing (SES), Average

Method and Simple Moving Average. The calculation using the three methods can be found in

appendix section. The calculation using those methods utilizes POM-QM software, where the

software is a tool to do calculations in operations management, including forecasting.

To define which method that will be used, the smallest Mean Square Error are

calculated. The result can be found in the table below:

Table 4.8 Comparison of MAD, MSE, MAPE and Std. Error

Method MAD MSE MAPE Std Error

Exponential Smoothing 127.54 25982.7 7.22% 178.2

Moving Average 116.19 20371.65 6.36% 161.84


Based on the table above, the best forecasting method is Moving Average because it

has the smallest error value (MAD, MSE, and MAPE) among all calculated forecasting

0

500

1000

1500

2000

2500

Kapal Api

53

method. Using the Moving Average method, the forecasting for Kapal Api Mix 25gr in 2019

period is as follows:

Table 4.9 Forecasting of Kapal Api Mix 25gr for the 2019 Period

Month Forecast

January 2019 1827

February 2019 1827

March 2019 1827

April 2019 1854

Mei 2019 1746

June 2019 1709

July 2019 1837

August 2019 1832

September 2019 1849

October 2019 1788

November 2019 1844

December 2019 1793

Total Demand of 2019 21733


4.3.2 Forecasting of Sampoerna Mild 16 Mulia Mart

The following table is the sales of Sampoerna Mild 16 in Mulia Mart during January


54

Table 4.10 Sampoerna Mild 16 Sales

Month Sales (unit)

January 2018 1,778

February 2018 1420

March 2018 1522

April 2018 1529

Mei 2018 1022

June 2018 3289

July 2018 1877

August 2018 1785

September 2018 1698

October 2018 1704

November 2018 1792

December 2018 1869

Total 21285



Figure 4.2 Sampoerna Mild Sales Trend

From the chart, it is known that the sales of Sampoerna Mild have a cyclic trend. The

forecasting method that are used for cyclic trend are Simple Exponential Smoothing (SES),

0

500

1000

1500

2000

2500

3000

3500

Sampoerna Mild

55

Average Method and Simple Moving Average. The calculation using the three methods can be

found in appendix section. The calculation using those methods utilizes POM-QM software,

where the software is a tool to do calculations in operations management, including forecasting.






Moving Average 410.41 494024.2 19.88% 796.98


Based on the table above, the best forecasting method is Exponential Smoothing

because it has the smallest error value (MAD, MSE, and MAPE) among all calculated

forecasting method. Using the Exponential Smoothing method, the forecasting for Sampoerna

Mild 16 in 2019 period is as follows:

56

Table 4.12 Forecasting of Sampoerna Mild 16 for the 2019 Period

Month Forecast

January 2019 1778

February 2019 1778

March 2019 1775

April 2019 1772

Mei 2019 1770

June 2019 1762

July 2019 1778

August 2019 1779

September 2019 1779

October 2019 1778

November 2019 1777

December 2019 1777



4.3.3 Forecasting of Luwak White Coffee 20gr Mulia Mart

The following table is the sales of Luwak White Coffee 20gr in Mulia Mart during

January 2018 to December 2018 period.

57

Table 4.13 Luwak White Coffee 20gr Sales

Month Sales (unit)

January 2018 924

February 2018 930

March 2018 880

April 2018 950

Mei 2018 1080

June 2018 1120

July 2018 980

August 2018 907

September 2018 800

October 2018 840

November 2018 950

December 2018 970

Total 11,331



Figure 4.3 Luwak White Coffee Sales Trend

From the chart, it is known that the sales of Luwak White Coffee have a cyclic trend.

The forecasting method that are used for cyclic trend are Simple Exponential Smoothing (SES),

0

200

400

600

800

1000

1200

Luwak white coffee

58








Exponential Smoothing 74.54 7429 7.89% 95.29

Moving Average 115.26 15946 12.2% 143.19


Based on the table above, the best forecasting method is Exponential Smoothing

because it has the smallest error value (MAD, MSE, and MAPE) among all calculated

forecasting method. Using the Exponential Smoothing method, the forecasting for Luwak

White Coffee 20gr in 2019 period is as follows:

59

Table 4.15 Forecasting of Luwak White Coffee 20gr for the 2019 Period

Month Forecast

January 2019 967

February 2019 924

March 2019 930

April 2019 885

Mei 2019 944

June 2019 1067

July 2019 1115

August 2019 994

September 2019 916

October 2019 812

November 2019 838

December 2019 939



4.3.4 Forecasting of Coffeemix Sachet 20gr Mulia Mart

The following table is the sales of Coffeemix Sachet 20gr in Mulia Mart during January


60

Table 4.16 Coffeemix Sachet 20gr Sales

Month Sales (unit)

January 2018 1,240

February 2018 997

March 2018 844

April 2018 920

Mei 2018 887

June 2018 1200

July 2018 833

August 2018 921

September 2018 912

October 2018 800

November 2018 890

December 2018 949

Total 11,392



Figure 4.4 Coffeemix Sachet Sales Trend

0

200

400

600

800

1000

1200

1400

Coffeemix

61

From the chart, it is known that the sales of Coffeemix Sachet have a cyclic trend. The

forecasting method that are used for cyclic trend are Simple Exponential Smoothing (SES),









Moving Average 103.74 18222.59 10.76% 153.07


Based on the table above, the best forecasting method is Moving Average because it

has the smallest error value (MAD, MSE, and MAPE) among all calculated forecasting

method. Using the Moving Average method, the forecasting for Coffeemix Sachet 20gr in 2019

period is as follows:

62

Table 4.18 Forecasting of Coffeemix Sachet 20gr for the 2019 Period

Month Forecast

January 2019 880

February 2019 880

March 2019 880

April 2019 1027

Mei 2019 921

June 2019 884

July 2019 1003

August 2019 974

September 2019 985

October 2019 889

November 2019 878

December 2019 868



4.4 Inventory Cost Calculation using EOQ model

In order to get the inventory cost, the first thing that is needed to be figured out is the

right quantity by using EOQ formula. EOQ is Economic Order Quantity, or in the other words;

the optimum one-time order quantity.

In the formula, S stands for setup cost. The fixed-cost in Mulia Mart is the salesman fee

of Rp 10000 per order. H stands for holding cost and it has been calculated in the previous

subsection. D stands for annual demand.

EOQ Kapal Api Mix 25gr

EOQ = √2 𝐷 𝑆

𝐻 = √

2 (21913) (10000)

76.77 = 2389.29 or equal to 2390 units

N stands for the total order made in a year.

63

N = 𝐷

𝐸𝑂𝑄=

21913

2390 = 9.16 or 10 orders in a year.

EOQ Sampoerna Mild 16


𝐻 = √

2 (21285) (10000)

175.04 = 1559.49 or equal to 1560 units

N = 𝐷

𝐸𝑂𝑄=

21285


EOQ Luwak White Coffee 20gr


𝐻 = √

2 (11331) (10000)

89.72 = 1589.29 or equal to 1590 units.

N = 𝐷

𝐸𝑂𝑄=

11331


EOQ Coffeemix Sachet 20gr


𝐻 = √

2 (11392) (10000)

76.95 = 1720.72 or equal to 1721 units.

N = 𝐷

𝐸𝑂𝑄=

11392


The next step is to find the total order cost based on the EOQ result that can be seen in

the table below:

Table 4.19 Order cost after applying EOQ in 2018 sales period

Product Name EOQ

(units)

Order

Frequency

Fixed cost for every

order (Rp) Order Cost (Rp)

Kapal Api Mix

25gr 2390 10 10,000 100,000

Sampoerna

Mild 16 1560 14 10,000 140,000

Luwak White

Coffee 20gr 1590 8 10,000 80,000

Coffeemix

Sachet 20gr 1721 7 10,000 70,000

64

Total 390,000

Source: Data Analysis

Based on the above calculation, the total order cost after applying EOQ model in 2018

period is Rp 390,000. Meanwhile, the storage cost after applying EOQ model becomes:

Storage Cost = 𝑄

2𝐻

Q stands for optimal quantity (EOQ) and H is the storage cost per unit that has been

calculated before. The storage cost calculation using EOQ model can be seen in the table below:

65

Table 4.20 Storage cost using EOQ model in 2018 period

Product

Name

EOQ

(units)

EOQ/2

(units)

Storage cost

per unit

(Rp)

Storage cost

(Rp)

Kapal Api

Mix 25gr 2390 1195 76.77 91,740.15

Sampoerna

Mild 16 1560 780 175.04 136,531.2

Luwak White

Coffee 20gr 1590 795 89.72 71,327.4

Coffeemix

Sachet 20gr 1721 861 76.95 66,253.95

Total 365,852.55


Based on the calculation above, the acquired storage cost for Mulia Mart in 2018 period

after using EOQ model is Rp 365,852.55. The total inventory cost of Mulia Mart in the 2018

period after using EOQ model is:

Total inventory cost = 𝐷

𝑄𝑆 +

𝑄

2𝐻

= Order cost + Storage cost

= Rp 390,000 + Rp 365,852.55

= Rp 755,852.55

From the calculation above, the total inventory cost for Mulia Mart using EOQ model for the

2018 period is Rp 755,852.55.

66

4.5 Inventory Cost Calculation using EOQ model for the 2019 Period

In order to get the inventory cost, the first thing that is needed to be figured out is the

right quantity by using EOQ formula. EOQ is Economic Order Quantity, or in the other words;

the optimum one-time order quantity.

In the formula, S stands for setup cost. The fixed-cost in Mulia Mart is the salesman fee

of Rp 10000 per order. H stands for holding cost and it has been calculated in the previous

subsection. D stands for annual demand.

EOQ Kapal Api Mix 25gr


𝐻 = √

2 (21733) (10000)

76.77 = 2379.46 or equal to 2380 units

N stands for the total order made in a year.

N = 𝐷

𝐸𝑂𝑄=

21733


EOQ Sampoerna Mild 16


𝐻 = √

2 (21303) (10000)

175.04 = 1560.15 or equal to 1561 units

N = 𝐷

𝐸𝑂𝑄=

21303


EOQ Luwak White Coffee 20gr


𝐻 = √

2 (11331) (10000)

89.72 = 1589.29 or equal to 1590 units.

N = 𝐷

𝐸𝑂𝑄=

11331


EOQ Coffeemix Sachet 20gr


𝐻 = √

2 (11069) (10000)

76.95 = 1696.15 or equal to 1697 units.

N = 𝐷

𝐸𝑂𝑄=

11069


67

The next step is to find the total order cost based on the EOQ result that can be seen in

the table below:

Table 4.21 Order cost after applying EOQ in 2019 sales forecasting

Product Name EOQ

(units)

Order

Frequency

Fixed cost for every

order (Rp) Order Cost (Rp)

Kapal Api Mix

25gr 2390 10 10,000 100,000

Sampoerna

Mild 16 1690 14 10,000 140,000

Luwak White

Coffee 20gr 1590 8 10,000 80,000

Coffeemix

Sachet 20gr 1721 7 10,000 70,000

Total 390,000


Based on the above calculation, the forecasted total order cost after applying EOQ

model for 2019 period is Rp 390,000. Meanwhile, the storage cost after applying EOQ model

becomes:

Storage Cost = 𝑄

2𝐻

Q stands for optimal quantity (EOQ) and H is the storage cost per unit that has been

calculated before. The storage cost calculation using EOQ model can be seen in the table below:

68

Table 4.22 Storage cost forecast using EOQ model for 2019 period

Product

Name

EOQ

(units)

EOQ/2

(units)

Storage cost

per unit

(Rp)

Storage cost

(Rp)

Kapal Api

Mix 25gr 2380 1190 76.77 91,356.3

Sampoerna

Mild 16 1561 780.5 175.04 136,618.72

Luwak White

Coffee 20gr 1590 795 89.72 71,327.4

Coffeemix

Sachet 20gr 1697 848.5 76.95 65,292.08

Total 364,594.5


Based on the calculation above, the forecasted storage cost for Mulia Mart for the 2019

period after using EOQ model is Rp 364,594.5. The total inventory cost of Mulia Mart in the

2018 period after using EOQ model is:

Total inventory cost = 𝐷

𝑄𝑆 +

𝑄

2𝐻

= Order cost + Storage cost

= Rp 390,000 + Rp 364,594.5

= Rp 754,594.5

From the calculation above, the total forecasted inventory cost for Mulia Mart using EOQ

model for the 2019 period is Rp 754,594.5.

4.6 Safety Stock and Reorder Point Calculation

Determining safety stock at one’s company has the role of securing inventory. If a

company uses safety stock, they will still have stock available when there’s a delay in the

69

delivery or if the demand is fluctuating. Reorder point means the point where a company must

place an order, because there’s a lead time in delivery so that the company has to anticipate the

possibility of delay in the delivery process of the order, and that’s where reorder point plays

the role. Below is the calculation of the safety stock and reorder point in Mulia Mart:

Kapal Api Mix 25gr

Table 4.23 Standard Deviation & Average Demand calculation of Kapal Api Mix 25gr

Month Sales (d) ƌ ( d – ƌ) ( d – ƌ)2

January 2018 2,026 1826.08 199.92 39,968.01

February 2018 1910 1826.08 83.92 7,042.57

March 2018 1626 1826.08 -200.08 40,032.01

April 2018 1700 1826.08 -126.08 15,896.17

Mei 2018 1800 1826.08 -26.08 680.17

June 2018 2009 1826.08 182.92 33,459.73

July 2018 1685 1826.08 -141.08 19,903.57

August 2018 1852 1826.08 25.92 671.85

September 2018 1826 1826.08 -0.08 0.01

October 2018 1853 1826.08 26.92 724.69

November 2018 1700 1826.08 -126.08 15,896.17

December 2018 1926 1826.08 99.92 9,984.01

Total 21,913 184,258.92

Soruce: Data Analysis

Standar deviation of demand:

𝜎𝑑 = √∑(𝑑 − �̅�)2

𝑛 − 1

= √184259

12 − 1

70

= 130 𝑢𝑛𝑖𝑡𝑠

The company lead time is one day. With 95% of service rate, the z value will be 1.645.

The demand of Kapal Api Mix 25gr for 1 year is 21,913 units, the average working day in a

year is 360 days. So, the average demand level of Kapal Api Mix 25gr is 60.86 unit per day.

Therefore, it can be calculated:

𝜎𝐿 = √𝐿𝑇 𝑥 (𝜎𝑑)2

= √1 𝑥 (130)2

= 130 days

So, the safety stock and the reorder point will be:

𝑠𝑠 = 𝑧 𝑥 𝜎𝐿

= 1.645 x 130

ss = 213.85 units = 214 units

𝑅𝑂𝑃 = (�̅�𝑥 𝐿𝑇) + 𝑠𝑠

= (60.86 x 1) + 214

ROP = 274.86 units = 275 units

That means, Mulia Mart needs to at least have 214 units of Kapal Api Mix 25gr as the

safety stock. If the stock has reached 275 units level, it is suggested that Mulia Mart do the

reordering process.

Sampoerna Mild 16

71

Table 4.24 Standard Deviation & Average Demand calculation of Sampoerna Mild 16

Month Sales (d) Ƌ ( d – ƌ) ( d – ƌ)2

January 2018 1,778 1773.75 4.25 18.06

February 2018 1420 1773.75 -353.75 125,139.06

March 2018 1522 1773.75 -251.75 63,378.06

April 2018 1529 1773.75 -244.75 59,902.56

Mei 2018 1022 1773.75 -751.75 565,128.06

June 2018 3289 1773.75 1,515.25 2,295,982.56

July 2018 1877 1773.75 103.25 10,660.56

August 2018 1785 1773.75 11.25 126.56

September 2018 1698 1773.75 -75.75 5,738.06

October 2018 1704 1773.75 -69.75 4,865.06

November 2018 1792 1773.75 18.25 333.06

December 2018 1869 1773.75 95.25 9,072.56

Total 21,285 3,140,344.25



𝜎𝑑 = √∑(𝑑 − �̅�)2

𝑛 − 1

= √3140345

12 − 1



The demand of Sampoerna Mild 16 for 1 year is 21,285 units, the average working day in a

year is 360 days. So, the average demand level of Sampoerna Mild 16 is 59.125 unit per day.

Therefore, it can be calculated:

72


= √1 𝑥 (535)2

= 535 days



= 1.645 x 535



= (59.125 x 1) + 881


That means, Mulia Mart needs to at least have 881 units of Sampoerna Mild 16 as the

safety stock. If the stock has reached 941 units level, it is suggested that Mulia Mart do the

reordering process.

Luwak White Coffee 20gr

Table 4.25 Standard Deviation & Average Demand calculation of Luwak White Coffee


January 2018 924 944.25 -20.25 410.06

February 2018 930 944.25 -14.25 203.06

March 2018 880 944.25 -64.25 4,128.06

April 2018 950 944.25 5.75 33.06

Mei 2018 1080 944.25 135.75 18,428.06

June 2018 1120 944.25 175.75 30,888.06

73

July 2018 980 944.25 35.75 1,278.06

August 2018 907 944.25 -37.25 1,387.56

September 2018 800 944.25 -144.25 20,808.06

October 2018 840 944.25 -104.25 10,868.06

November 2018 950 944.25 5.75 33.06

December 2018 970 944.25 25.75 663.06

Total 11,331 89,128.25



𝜎𝑑 = √∑(𝑑 − �̅�)2

𝑛 − 1

= √89129

12 − 1



The demand of Luwak White Coffee 20gr for 1 year is 11,331 units, the average working day

in a year is 360 days. So, the average demand level of Luwak White Coffee 20gr is 31.475 unit

per day. Therefore, it can be calculated:


= √1 𝑥 (91)2

= 91 days



74

= 1.645 x 91



= (31.475 x 1) + 150


That means, Mulia Mart needs to at least have 150 units of Luwak White Coffee 20gr

as the safety stock. If the stock has reached 182 units level, it is suggested that Mulia Mart do

the reordering process.

75

Coffeemix Sachet 20gr

Table 4.26 Standard Deviation & Average Demand calculation of Coffeemix Sachet 20gr


January 2018 1,240 949.33 290.67 84,489.05

February 2018 997 949.33 47.67 2,272.43

March 2018 844 949.33 -105.33 11,094.41

April 2018 920 949.33 -29.33 860.25

Mei 2018 887 949.33 -62.33 3,885.03

June 2018 1200 949.33 250.67 62,835.45

July 2018 833 949.33 -116.33 13,532.67

August 2018 921 949.33 -28.33 802.59

September 2018 912 949.33 -37.33 1,393.53

October 2018 800 949.33 -149.33 22,299.45

November 2018 890 949.33 -59.33 3,520.05

December 2018 949 949.33 -0.33 0.11

Total 11,392 206,985.01



𝜎𝑑 = √∑(𝑑 − �̅�)2

𝑛 − 1

= √206985.01

12 − 1



The demand of Coffeemix Sachet 20gr for 1 year is 11,392 units, the average working day in

76

a year is 360 days. So, the average demand level of Coffeemix Sachet 20gr is 31.64 unit per

day. Therefore, it can be calculated:


= √1 𝑥 (138)2

= 138 days



= 1.645 x 138



= (31.64 x 1) + 228


That means, Mulia Mart needs to at least have 228 units of Coffeemix Sachet 20gr as

the safety stock. If the stock has reached 260 units level, it is suggested that Mulia Mart do the

reordering process.

77

4.7 Total Cost Comparation

From all calculations that have been done in the previous sub-chapter, the total

inventory cost that is incurred by Mulia Mart using the EOQ model can be seen from the graph

below:


It can be seen from figure 4.1 that the total inventory cost that has been incurred by

Mulia Mart is far too high compared to the cost that will be incurred when the EOQ model is

used. The total inventory cost for the 2018 period that Mulia Mart incurred is Rp 1,517,813.23,

while the total inventory cost incurred using EOQ model will be Rp 777,230.3. From the

difference between the two methods (original and EOQ), it can be calculated that the

application of EOQ model can save Mulia Mart up to Rp 740,582.9 or about 48.79% of the

initial inventory cost.

0 100000 200000 300000 400000

Kapal Api Mix 25gr

Sampoerna Mild 16

Luwak White Coffee 20gr

Coffeemix Sachet 20gr

Kapal Api Mix25gr

Sampoerna Mild16

Luwak WhiteCoffee 20gr

Coffeemix Sachet20gr

EOQ method 191.740 259.300 259.650 259.650

Current system 400218,99 384454,6 363007,44 370150,2

Inventory Cost Comparation

Figure 4.5 Inventory Cost Comparation in Mulia Mart

78

The order cost incurred is far different between the original method used by Mulia Mart

and the EOQ model. The difference is because the order quantity using EOQ model is the

optimized quantity, and that will surely hold the order cost not to be too much. Another perk

using EOQ model is that the storage cost of each product is way cheaper than the original cost

Mulia Mart has been applying. This is because EOQ minimizes the holding/storage cost

because of the quantity ordered is already optimized to be sold accordingly to the consumer’s

demand.

chapter 4 research analysis and outcome 4.1 4.1.1...

Documents