Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study
Abstract. This research is aimed to maintain the inventory level in a two-echelon pharmacy company. The company is a pharmacy company that has 16 branches that operate in Bandung and the surrounding area. The company has a problem with its high inventory cost. To solve the problem, the authors compa...
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| Format: | Article |
| Language: | English |
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Institut Teknologi Bandung
2020-12-01
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| Series: | Asian Journal of Technology Management |
| Subjects: | |
| Online Access: | https://journal.sbm.itb.ac.id/index.php/ajtm/article/view/3782 |
| _version_ | 1818897807886516224 |
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| author | Desy Anisya Farmaciawaty Mursyid Hasan Basri Akbar Adhi Utama Fransisca Budyanto Widjaja Ilma Nurul Rachmania |
| author_facet | Desy Anisya Farmaciawaty Mursyid Hasan Basri Akbar Adhi Utama Fransisca Budyanto Widjaja Ilma Nurul Rachmania |
| author_sort | Desy Anisya Farmaciawaty |
| collection | DOAJ |
| description | Abstract. This research is aimed to maintain the inventory level in a two-echelon pharmacy company. The company is a pharmacy company that has 16 branches that operate in Bandung and the surrounding area. The company has a problem with its high inventory cost. To solve the problem, the authors compare two methods that suit the company condition, i.e., the decentralized system using probabilistic EOQ model and the centralization system using the multi-echelon inventory technique. We analyzed sales data and on-hand inventory data acquired from the company information system to perform the study. We limit the scope to the class A items only. We also assume the lead time, setup cost, and holding cost used in this study with the company's owner's consent. To conclude, using the decentralized system, the company will save 31% of their inventory cost, while using the centralization system with the multi-echelon technique, the company will be able to save 61% of their inventory cost. We recommend the company to refer to its competitive strategy before deciding which model it would be implemented.
Keywords: Centralization, Decentralization, Probabilistic Economic Order Quantity (EOQ), Multi-Echelon Inventory, Pharmaceutical Inventory Management |
| first_indexed | 2024-12-19T19:22:03Z |
| format | Article |
| id | doaj.art-99e09a2d10bc4fc2a0b978987f17d363 |
| institution | Directory Open Access Journal |
| issn | 1978-6956 2089-791X |
| language | English |
| last_indexed | 2024-12-19T19:22:03Z |
| publishDate | 2020-12-01 |
| publisher | Institut Teknologi Bandung |
| record_format | Article |
| series | Asian Journal of Technology Management |
| spelling | doaj.art-99e09a2d10bc4fc2a0b978987f17d3632022-12-21T20:08:59ZengInstitut Teknologi BandungAsian Journal of Technology Management1978-69562089-791X2020-12-0113322924210.12695/ajtm.2020.13.3.4Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case StudyDesy Anisya Farmaciawaty0Mursyid Hasan Basri1Akbar Adhi Utama2Fransisca Budyanto Widjaja3Ilma Nurul Rachmania4School of Business Management, Institut Teknologi Bandung, IndonesiaSchool of Business Management, Institut Teknologi Bandung, IndonesiaSchool of Business Management, Institut Teknologi Bandung, IndonesiaSchool of Business Management, Institut Teknologi Bandung, IndonesiaSchool of Business Management, Institut Teknologi Bandung, IndonesiaAbstract. This research is aimed to maintain the inventory level in a two-echelon pharmacy company. The company is a pharmacy company that has 16 branches that operate in Bandung and the surrounding area. The company has a problem with its high inventory cost. To solve the problem, the authors compare two methods that suit the company condition, i.e., the decentralized system using probabilistic EOQ model and the centralization system using the multi-echelon inventory technique. We analyzed sales data and on-hand inventory data acquired from the company information system to perform the study. We limit the scope to the class A items only. We also assume the lead time, setup cost, and holding cost used in this study with the company's owner's consent. To conclude, using the decentralized system, the company will save 31% of their inventory cost, while using the centralization system with the multi-echelon technique, the company will be able to save 61% of their inventory cost. We recommend the company to refer to its competitive strategy before deciding which model it would be implemented. Keywords: Centralization, Decentralization, Probabilistic Economic Order Quantity (EOQ), Multi-Echelon Inventory, Pharmaceutical Inventory Managementhttps://journal.sbm.itb.ac.id/index.php/ajtm/article/view/3782centralizationdecentralizationprobabilistic economic order quantity (eoq)multi-echelon inventorypharmaceutical inventory management |
| spellingShingle | Desy Anisya Farmaciawaty Mursyid Hasan Basri Akbar Adhi Utama Fransisca Budyanto Widjaja Ilma Nurul Rachmania Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study Asian Journal of Technology Management centralization decentralization probabilistic economic order quantity (eoq) multi-echelon inventory pharmaceutical inventory management |
| title | Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study |
| title_full | Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study |
| title_fullStr | Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study |
| title_full_unstemmed | Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study |
| title_short | Inventory Level Improvement in Pharmacy Company Using Probabilistic EOQ Model and Two Echelon Inventory: A Case Study |
| title_sort | inventory level improvement in pharmacy company using probabilistic eoq model and two echelon inventory a case study |
| topic | centralization decentralization probabilistic economic order quantity (eoq) multi-echelon inventory pharmaceutical inventory management |
| url | https://journal.sbm.itb.ac.id/index.php/ajtm/article/view/3782 |
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