Inventory Control Analysis of Raw Materials Using the Min–Max Stock Method in LPG Cap Seal Production at PT. XYZ

Abstract

Raw material inventory control plays a crucial role in supporting the smooth production process while simultaneously increasing operational cost efficiency. PT. XYZ, a manufacturing company producing LPG cap seals, still faces inventory management challenges, as indicated by the high frequency of orders and the high total inventory costs. This study aims to improve the inventory control system by implementing the min-max stock method. The research process begins with forecasting raw material needs using several methods, then selecting the method with the lowest error rate as the basis for the calculation. The forecast results are then used in the application of the min-max stock method to determine a more optimal inventory policy. Evaluation is carried out by comparing the performance of the proposed method with the method used by the company based on the frequency of orders and total inventory costs. The results show that the application of the min-max stock method is able to reduce the frequency of orders and inventory costs for all raw materials. For LDPE plastic, the frequency of orders decreased from 36 times to 30 times with a cost saving of Rp2,310,000 or 10%, while for HDPE plastic, the frequency also decreased from 36 times to 30 times with a saving of Rp2,160,000 or 10%. For dye raw materials, the ordering frequency was reduced from 24 to 23, resulting in savings of Rp352,500, or 3%. Overall, total inventory costs were reduced by Rp4,822,500, or approximately 9% of the initial level. Thus, the min-max stock method has proven to be more effective in inventory management because it can reduce costs, optimize ordering frequency, and maintain raw material availability to support smooth production processes.

Keywords: Forecasting; Inventory costs; Inventory control; Min-max stock