Analysis of Economic Order Quantity of Cosmetic Raw Materials: a Case Study of Cosmetics Factory

Abstract

The purposes of this research were 1) to select the appropriate forecasting of cosmetic products; and 2) to analyze the appropriate order quantities enhancing efficiency in inventory management. Material 10003560 was representative used in top long lead time and highest price. The future demand for above items were forecasted by 3 methods, including 1) simple moving average 3 periods, 2) simple moving average 6 periods, and 3) single exponential smoothing. The most appropriate method was selected by forecast error considering about minimize MAPE, MAD and MSE. The results revealed that select material 10003560. It was used in top long lead time and highest price. The most appropriated forecasting method was single exponential smoothing technique. The forecasting result has calculated the inventory management factor. The economical order quantity material 10003560 had a reorder frequency of every 46 days and order in quantity of 275 kilograms per order. The safety stock was 23.43 kilograms and reorder point was 208.41 kilograms at service level 80 percent. A reduction of 18,442.14 baht per year (45%) brought the total cost of ordering and storage down to 22,654.63 baht per year from 41,096.77 baht per year.