Topic > Improving Inventory Management in Power Generation Companies

2.1.2.6 Inventory Control Model The oldest inventory control model was introduced by Ford W Harris in 1915. The approach of this model is to You build a model of an idealized inventory system and calculate the fixed value order quantity that minimizes total costs. This optimal order size is called economic order quantity (EOQ) (Waters, 2003). The EOQ model depends on four parameters: there is; demand is known and constant, holding cost is known and constant, order cost is known and constant, and unit cost is known and constant. Thus, based on the parameters it can be shown that in the EOQ approach the model is depicted as a tooth. Figure 2.3 Economic order quantity Source: Waters (2003 Furthermore, when the right time to order is commonly called the recommended order point (ROP). is working based on two parameters, the average demand during the lead time and safety stocks Lin (1980), cited in Zong (2008), stated that safety stocks are not necessary if the supplier is reliable and there is no seasonal demand. The Economic Batch Quantity (EBQ) system is useful for items produced internally and intermittently. Another inventory control model known as Vendor Managed Inventory (VMI), is the retailer-vendor relationship inventory model that l the buyer allowed the seller provides replenishment based on actual demand The other method of inventory control is Just in Time (2006) states that there is a method of managing inventory that emphasizes on getting the most cost effective. The method is the pull system, JIT. This method was introduced by Toyota Corp as a pull method inventory management method. Boyd (2002) states that the implementation of JIT method gives a positive trend effect to s...... half of the article ......Syntetos, A and Boylan, J,E (2004) Inventory Management for Spare Parts, Article Conference: Second World Conference on POM and 15th Annual POM.27. Teunter, Ruud H, Babai, M Zeid and Syntetos, Aris A. (2010). ABC classification: Service levels and inventory costs. Production and operations management. vol. 19, no. 3, pp. 343-352.28. Twentyx (2014). Ellipse 8.4 Navigation. EMS Paramitra29. Waters, D., (2003). Inventory control and management. John Willey & Sons Ltd, pp 208-209.30. Wahyudi, S., (2009). Power Plant Asset Criticality Classification Analysis for Basic Determination of Equipment Maintenance Priority in Cilacap Coal-Fired Steam Power Plant., Master's Thesis., Bandung Institute of Technology.31. Zongjian,L., (2013) Inventory Management of Slow-Moving Spare Parts in China National Power Plant, Master's Thesis, Molde University College. page 53-54.