Raw Material Ordering Quantity for Wiring Harness Using Economic Order Quantity Method Considering Warehouse Capacity

Abstract

This research aims to determine the optimal ordering quantity of bus wiring harness raw materials by taking into account warehouse capacity constraints and procurement efficiency. The main challenges encountered by the company include stock shortages resulting from sudden demand increases and limited storage space, which consequently cause production delays and hinder the fulfilment of customer demand targets. The methodology applied involves the probabilistic Economic Order Quantity (EOQ) model to establish the optimal order quantity, in conjunction with the Lagrange Multiplier approach to facilitate the simultaneous ordering of various types of raw materials, thereby minimizing the total inventory cost. The data utilized in this study comprise historical demand, ordering cost, holding cost, warehouse capacity, and the targeted service level. The findings of this research are expected to reduce the risk of stock shortages, lower total inventory cost, and enhance the efficiency of production processes.