Volume 9, Issue 7, July – 2024 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24JUL615

Application of the Economic Order Quantity (EOQ)

Method on the Supply of Chemical Materials in the
Laboratory of PT. Fajar Surya Wisesa Tbk
Ririn Saputro1; Adi Fitra2; Susan Kustiwan3
Industrial Engineering Study Program, Faculty of Engineering, Pelita Bangsa University
Jl. Kalimalang Inspection No.9 Cibatu, Bekasi, 17530

Abstract:- The chemical inventory management at the I. INTRODUCTION

Waste Water Treatment Plant (WWTP) Laboratory of
PT. Fajar Surya Wisesa Tbk faces challenges in The industry in Indonesia are rapidly growing, leading to
determining the optimal order quantity, ideal reorder diverse industrial waste types that can potentially harm the
time, and appropriate Safety Stock (SS) to minimize environment and public health if not managed properly.
ordering and storage costs. This research aims to provide According to Minister of Public Works Regulation No. 6 of
solutions using the Economic Order Quantity (EOQ) 2011 on the management of water resources, large water
method to determine the optimal order quantity, Reorder users, hotels, restaurants, hospitals, and industries are required
Point (ROP) calculations to determine the reorder time, to recycle wastewater by establishing recycling installations.
and Safety Stock (SS) calculations to maintain the PT Fajar Surya Wisesa Tbk (Fajar Paper), one of Indonesia's
availability of chemical supplies. The research method leading packaging paper producers with an annual installed
used is a quantitative method with a descriptive production capacity exceeding 1.5 million tons, ensures
approach. Data is processed using POM for Windows environmental management and monitoring in compliance
(POM QM) software to calculate EOQ, ROP, and SS. The with government regulations and environmental permits.
research results show that using the EOQ method, PT. Their wastewater treatment process is handled by the WWTP
Fajar Surya Wisesa Tbk can determine the optimal order department using an anaerobic system, which processes
quantity for each type of chemical. For example, the various industrial waste streams from sectors like agriculture,
optimal order quantity for Ammonia Nitrogen is 3 boxes food and beverage, dairy, pulp and paper, textiles, municipal
with a total annual cost of Rp 150,525,100. The ROP sludge, wastewater, and others [20].
calculation for Sulfate is 2 boxes, while the SS for Water
Hardness is determined to be 1 box. The conclusion of However, observations in the WWTP department's
this research is that by applying the EOQ, ROP, and SS laboratory at PT Fajar Surya Wisesa Tbk revealed
methods, PT. Fajar Surya Wisesa Tbk can optimize the inefficiencies in managing chemical inventory, specifically
chemical inventory management in the WWTP reagents. Problems include excessive inventory and expired
laboratory. This method helps minimize total inventory materials before use, as depicted in Figure 1. Excess inventory
costs and ensures the availability of chemical supplies for not only affects the quality of stored materials over time but
smooth operations. The research recommends the also increases the risk of material expiration, leading to costly
company adopt a more integrated inventory management waste management issues [2]. To address these issues and
system and utilize information technology for real-time ensure optimal inventory levels, an effective inventory
inventory monitoring, thereby increasing operational management system is crucial.
efficiency and minimizing the risk of operational
disruptions due to inventory shortages.

Keywords:- Optimization of Chemical Inventory, WWTP

Laboratory, Economic Order Quantity (EOQ), Reorder Point
(ROP), Safety Stock (SS).

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Fig 1 Graph of Reagent Inventory Problems in 2023

Research by Devi Nala Ratih & Sunu Priyawan (2023) II. LITERATURE REVIEW
on the implementation of the Economic Order Quantity
(EOQ) method at PT Sucofindo Surabaya highlighted its  Company Profile
effectiveness in optimizing chemical inventory management. PT Fajar Surya Wisesa Tbk (FajarPaper) stands as a
Another study by Khariidatul Bahiyyah (2020) on chemical leading producer of packaging paper in Indonesia, renowned
inventory control using EOQ and Reorder Point (ROP) for its extensive production capacity exceeding 1.5 million
calculations at a water utility in Cimahi demonstrated cost tons annually. The company's product line includes Kraft
savings in storage and total inventory costs. Based on these Liner Board (KLB) and Corrugated Medium Paper (CMP),
studies, applying the EOQ method at PT Fajar Surya Wisesa utilized as raw materials for manufacturing packaging boxes
Tbk's WWTP laboratory can potentially minimize storage such as cardboard boxes. Additionally, they produce Coated
costs and optimize inventory levels. Duplex Board (CDB), used for display packaging. Established
as a limited liability company on February 29, 1988,
In essence, effective procurement planning and control FajarPaper later transitioned to a publicly listed company on
aim to minimize costs and maximize profitability. the Jakarta Stock Exchange on December 19, 1994
Implementing the EOQ analysis, as suggested [19], in (FASW.JK). FajarPaper is recognized for its forward-thinking
chemical inventory management at the WWTP department of approach, emphasizing energy conservation and
PT Fajar Surya Wisesa Tbk is expected to enhance inventory environmental stewardship. All products are crafted from
management practices and optimize chemical inventory 100% recycled paper, and the company meets its energy
within the company. needs through its own power generation facilities.

As of March 31, 2023, major shareholders holding 5%

or more of Fajar Surya Wisesa Tbk include SCGP Solutions
(Singapore) Pte., Ltd. with a stake of 55.23%, and PT
Intercipta Sempana with 44.48%. SCGP Solutions
(Singapore) Pte., Ltd. is controlled by Siam Cement Public
Company Limited, serving as the primary shareholder of
FajarPaper.

Fig 2 Organizational Structure of PT Fajar Surya Wisesa Tbk

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 Company Vision and Mission  Finished Goods Inventory: These are products that have
Vision: To become a world-class industrial paper completed the production process in the factory and are
manufacturer with a focus on recycling and sustainable ready to be sold to customers or distributed to other
manufacturing. companies.

Mission: To maintain our position as a leading Each type of inventory plays a specific role in
packaging paper manufacturer in Indonesia and the supporting operational production and meeting market
surrounding region by capitalizing on consumer and industrial demand efficiently. Understanding and effectively managing
market opportunities. each type of inventory is essential for optimizing production
performance and ensuring customer satisfaction.
 Definition of Inventory
According to Heryanto (in Bahiyyah, 2022), inventory  Inventory Costs
refers to a collection of products or materials stored for future According to Sanjaya & Purnawati (2021), There are
use. At PT. Fajar Surya Wisesa, inventory includes chemicals four types of inventory costs: holding or carrying costs,
such as Reagent test kit N, Reagent test kit P, Reagent test kit ordering costs, setup costs, and stockout or shortage costs
Hardness, Reagent test kit COD 1500, Reagent test kit [13]. Each cost category includes various components that
sulfate, and others. Effective inventory management is affect the company's inventory management, ranging from
crucial to support manufacturing activities by ensuring storage to the risk of material shortages.
adequate availability of raw materials, avoiding shortages,
and sustaining long-term competitive advantage for the  Inventory Control
company. Inventory management impacts various operational According to Soeltanong & Sasongko (2021), Inventory
aspects such as product quality, pricing, production control focuses on the optimal storage and use of reagent
efficiency, and the ability to meet customer demand inventory to maximize economic value [16]. The goal is to
promptly. "minimize production disruption and prevent excessive
capital investment in reagent inventory."
According to Ferawati et al. (2020), inventory of goods
is a primary asset in a company categorized into three types:  Economic Order Quantity (EOQ)
raw materials, work-in-progress, and finished goods. Raw F.W. Haris formulated the EOQ method in 1915 to
materials and work-in-progress are utilized in production achieve economic order quantity. According to Dardanella1
processes to streamline operations, while finished goods are et al. (2022), EOQ is a method of maximizing the acquisition
the final products prepared to meet market demand [7]. of goods by minimizing the use of costs and can increase the
Effective inventory management can enhance company effectiveness of product goods in business [3]. Laoli et al.
revenue by maintaining a proper balance between inventory (2022) added that EOQ answers two important questions:
investment and customer service [7] [13]. when to order and how much to order [9].

 Inventory Function
According to Siahaan & Muhidin (2020), inventory has
four main functions that increase the flexibility of company
operations: providing a choice of chemicals for production,
separating stages of the production process, utilizing bulk
purchase discounts, and avoiding inflation and price Description:
increases [15]. In the WWTP laboratory, the availability of
chemicals must be maintained to ensure a smooth production EOQ : Economic Order Quantity
process. D : Demand
S : Order cost per order
 Types of Inventory H : Storage cost/unit/year
According to Sofjan Assauri, inventory is a crucial
factor in achieving production efficiency in companies [6]. Bahiyyah et al. (2022) defined EOQ as a quantitative
There are several types of inventory that can be identified: method that can be used by management as inventory control
with an order size that minimizes the sum of storage costs
 Raw Material Inventory: This consists of raw materials and ordering costs. Ova Novi Irama & Murni Dahlena (2021)
used in the production process, sourced from natural mentioned five EOQ assumptions, including constant
resources or purchased from external suppliers. demand, item independence, immediate receipt, no stockout,
 Purchased Component Inventory: This type of inventory and constant price [12]. Dian Friana Hidayat & Joko
includes components purchased from external suppliers to Hardono (2022) emphasized that EOQ "aims to minimize
support production and product maintenance. Total Inventory Cost" and achieve the optimal number of
 Work-in-Process Inventory: This inventory includes ordering units by emphasizing the minimum possible cost
[4].
goods that are currently in the production process. Work-
in-process items require further processing before
becoming finished products.

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Laoli (2022) defines Safety Stock as a condition to for determining ROP: setting the amount of use during lead
anticipate uncertainties that may cause the company to run time plus Safety Stock, and setting an economic lead time
out of stock [9]. Mikharani et al. (2022) add that Safety Stock [18].
is "an inventory method that is created or held to maintain the
possibility of stock shortages or overstocks," and provide the ROP = d * L
calculation formula: Safety Stock = (maximum daily sales x
maximum lead time) - (average daily sales x average lead Description:
time) [10].
ROP : Reorder Point
Sukamdani et al. (2020) define ROP as the time or point d : Demand per day
at which another order must be placed in such a way that the L : Waiting time for new orders in days
arrival or receipt of the ordered goods [17]. Taska & Yulianti
(2020) added that ROP is how much time the company The relationship between EOQ, Safety Stock and ROP
should place an order, so that the arrival of the order is right can be described as the following graph:
with the exhaustion of materials, and suggested two policies

Fig 3 EOQ Safety Stock Relationship, and Reorder Point

Source: (Bakhtiar et al., 2023)

The graph shows that the optimal Reorder Point (ROP)  Research Gap
occurs at the intersection point between inventory reduction Researchers have conducted a literature study of several
and lead time. Ordering at this point ensures new materials previous studies, such as a study entitled "Chemical
arrive when Safety Stock runs out, preventing shortages or Inventory Control with EOQ (Economic Order Quantity) and
overstocks. ROP (Reorder Point) Calculations at the Cimahi City
Drinking Water BLUD. " by Khariidatul Bahiyyah and
 POM QM For Windows "Analysis of the Implementation of the Economic Order
Pom QM for Windows is software designed to facilitate Quantity (EOQ) Method as a Planning and Control Tool for
quantitative analysis and modeling in various fields of Laboratory Chemicals at PT Sucofindo Surabaya" by Devi
business and management. Its main features include Nala Ratih, Sunu Priyawan. The research provides
quantitative analysis, optimization modeling, simulation and information related to the research methods used, namely the
forecasting, project management, and an easy-to-use EOQ and ROP methods only. From some of these studies,
interface. The software is useful for students, faculty, and researchers are interested in applying these methods with
professionals who want to analyze data and make data-driven different objects, namely chemical supplies in the WWTP
decisions in business and management contexts. department laboratory of PT Fajar Surya Wisesa Tbk. using
the EOQ method by simultaneously calculating Safety Stock
which is expected to achieve ideal chemical stock
management so as to reduce the issue of over stock and
expired chemicals before use.

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III. RESEARCH METHODS

A. Research Design
This research uses quantitative methods with measured data from the WWTP laboratory of PT Fajar Surya Wisesa Tbk. The
preliminary stage involved structured planning, starting with the creation of a flowchart as a frame of reference for the research to
ensure the flow is in accordance with the research objectives.

Fig 4 Research Flow Chart

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B. Location and Time of Research  Secondary Data:

The field study was conducted for 4 weeks in the Obtained from company information, encompassing
laboratory of the WWTP Department of PT Fajar Surya reagent ordering and delivery lead time data, reagent usage
Wisesa Tbk, located at Jln. Abdul Muis 30, Central Jakarta data for 2022, and the quantity of orders in 2022.
10160, Indonesia. The implementation time followed the
working hours of the company's employees.  Literature Study
This involves studying, analyzing, comparing, and citing
C. Data Collection Technique theories and concepts from various literature sources such as
The data used in this research is quantitative. To collect books, scientific works, journals, and other relevant sources
the data, the following methods were employed: related to the research topic.

 Field Study D. Data Analysis Technique

This technique involves direct observation in the WWTP
department laboratory at PT. Fajar Surya Wisesa Tbk. The  Data tabulation
research utilized several data sources:
 Organizing Data in the form of a List or Table
 Primary Data: Example: tabulation of ordering quantity and usage of
Collected through direct interviews and observations, chemicals/reagents in the WWTP department laboratory of
including data on ordering costs per order and annual per-unit PT Fajar Surya Wisesa Tbk.
reagent storage costs.

Table 1 Tabulation of Reagent usage and Order Quantity Data

 Supplier Data and Delivery Lead time

Each reagent supplier has a different delivery lead time. The reagent delivery lead time data based on the supplier will be
tabulated as in table 2.

Table 2 Tabulation of Supplier Data and Lead Time

 Reagent Ordering Cost and Storage Cost Data

The calculation of annual per-unit reagent storage and ordering costs is a crucial aspect of inventory management. Storage
costs include chemical management, while ordering costs include admin services and loading and unloading. This cost data will
be tabulated for further analysis.

Table 3 Tabulation of Storage Cost and Order Cost Data for each Reagent

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 Forecasting Demand Description:

Data processing uses forecasting methods to determine
reagent demand. Based on the data pattern, observation D : Actual value in period t
period, and forecasting period, the selected methods are F : Forecast value in period t
Simple Moving Average and Single Exponential Smoothing n : Number of periods
for short-term forecasting. According to Faradisa & Rizal
(2024), these two methods are suitable for forecasting reagent
demand in the coming period [5].

Description:

D : Actual value in period t

Description: F : Forecast value in period t
n : Number of periods
SMA: Single Moving Average of the next period
: is the historical demand data of time period n
n : Number of time periods

Description:

Description: D : Actual value in period t

F : Forecast value in period t
SES : Single Exponential Smoothing
: Forecasting period (t-1)  Economic Order Quantity (EOQ) Analysis
: Actual demand of period (t-1) Economic Order Quantity (EOQ) analysis is used to
determine the economical amount of reagent ordering in a
α : actual demand of period (t-1)
year, preventing shortages or overstocks. EOQ calculations
consider ordering costs, storage costs, and demand.
The selection of the best forecasting method is done by
comparing the smallest error values using MAD, MSE, and
MAPE. According to Dardanella1 et al. (2022), 'the one with
the lowest error rate or MAD, MSE, and MAPE values is the
best forecasting method that can be used [3].

Description:

EOQ : Economic Order Quantity

D : Demand
S : Order cost per order
H : Storage cost/unit/year

Fig 5 Graph of the relationship between message costs and storage costs
Source: (Octaviani & Imaroh, 2020)

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The optimal order quantity is achieved when there is a Order cost covers the cost of placing and receiving
balance between ordering costs and holding costs. Ordering orders, including administration, shipping insurance, and
in large quantities (large lots) reduces ordering costs but unloading. Setup costs include preparation of equipment and
increases holding costs. Conversely, ordering in small production facilities. In this context, reagent ordering costs
quantities (small lots) increases ordering costs but reduces consist of laboratory admin service costs for ordering and
holding costs. Therefore, the Economic Order Quantity unloading costs when the reagents arrive.
(EOQ) model aims to maintain an optimal order quantity that
strikes a balance between these costs. Using the EOQ model,
the optimal order quantity occurs at the point where the total
ordering costs equal the total holding costs.

 Safety Stock (SS) Calculation Description:

Safety Stock is important to maintain a smooth business
process. According to Afrimarsa et al. (2022), Safety Stock D: demand per time period
'helps avoid the danger of running out of materials' in case of Q: number of units per order
problems in the business cycle [1]. However, Setiawan S: order cost per order
(2019) reminded that 'excessive amounts of Safety Stock will
also cause new problems, namely high storage costs [14]. After calculation and analysis using the EOQ, Safety
The EOQ method is used to calculate the optimal Safety Stock, and Reorder Point methods, the results are interpreted
Stock. Therefore, using the EOQ method, Safety Stock is by comparing reagent inventory management before and after
calculated using the following formula: the application of the EOQ method. The focus of the
SS= (usage_max-usage average ) x Lead time comparison is on the potential savings in total inventory costs
incurred by the company.
 Reorder Point (ROP) Calculation
Reorder Point determines the reorder point before  Conclusions and Suggestions
inventory runs out. According to Chaeroni & Rizkiyah This research will produce conclusions and suggestions
(2024), it is 'the point at which inventory has reached such a for improving the company's system and further research.
low point that an order must be placed immediately' [2]. Itsna With an exploratory approach, the research aims to determine
R et al. (2023) explain that 'Reorder Point is the product of Economic Order Quantity (EOQ), Reorder Point (ROP), and
the lead time required to order and the average usage of the Safety Stock (SS) to optimize inventory management and
item [8]. The following is the Reorder Point calculation overcome demand uncertainty.
formula:
IV. RESULTS AND DISCUSSION

A. Profile of the Final Project Object

The laboratory in the Waste Water Treatment Plant
Description: (WWTP) department at PT Fajar Surya Wisesa Tbk uses
various chemicals in its operations. So that to manage
ROP : Reorder Point chemical inventory efficiently, a method is needed that is able
d : Average use of reagent to determine the optimum order quantity so that total costs can
Lt : Lead time be minimized. The Economic Order Quantity (EOQ) method
SS : Safety Stock is the right approach to achieve this goal, by calculating the
optimal order quantity based on ordering costs and storage
 Total Inventory Cost Calculation costs [11]. In addition, it is necessary to do Reorder Point
Total Inventory Cost includes the cost of ordering and (ROP) to determine the ideal time to reorder inventory based
storing reagents. According to Itsna R et al. (2023), 'when on average daily demand and lead time and pay attention to
inventory is material purchased from outside, the costs Safety Stock (SS) to minimize the risk of running out of
associated with this inventory are ordering costs and storage inventory.
costs' [8]. In this case, storage costs include two rooms:
reagent space for direct use and storage space for stock. B. Data Collection
Storage costs are calculated using the following equation:
 Chemical Usage Data
Chemical usage data is collected during a certain period
to determine the pattern of use and demand for materials in
the laboratory. This data includes monthly usage (boxes per
Description: month) and average daily usage (boxes per day).

Q : number of units per order

H : Unit storage cost per year

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Table 4 Chemical Usage

 Cost Data
To calculate EOQ, ROP, and SS, we need cost data related to ordering and storing chemicals. This data includes; Ordering
cost per order (Rp), Storage cost per unit per year (Rp), and Cost per unit (Rp).

Table 5 Cost Data

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 Data Processing

 Ammonia, Nitrogen

Fig 6 EOQ Calculation for Ammonia

Based on the calculation results from POM for Windows  Calculation Safety Stock (SS)
software (POM QM) for the chemical Ammonia, Nitrogen,
the annual demand (Demand Rate) was recorded as 48 boxes Safety Stock = (Maximum Daily Demand * Maximum Lead
per year. The ordering cost per order (Setup/Ordering Cost) is time) - (Average Daily Demand * Average Lead time)
IDR 50,000, while the storage cost per unit per year Safety Stock = (0.2×10) - (0.13×7)
(Holding/Carrying Cost) is IDR 620,000 per box, with a unit Safety Stock = 1.09 boxes ≈ 1 box
cost of IDR 3,100,000 per box.
 Reorder Point (ROP) Calculation
Calculations show that the Optimal Order Quantity (Q*)
is 2.78 boxes, which is usually rounded up to 3 boxes for ROP = (Average Daily Demand * Average Lead time) +
practical purposes. The maximum inventory level (Imax) that Safety Stock
can be achieved after the new order arrives is 3 boxes, while ROP = (0.13×7) + 1
the average inventory held during a period (Average ROP = 0.91 + 1
Inventory) is about 1.39 boxes or 2 boxes. ROP=1.91 boxes ≈ 2 boxes

The number of orders to be placed per year (Orders per With the results of this calculation, PT Fajar Surya
Period, N) is about 17.25 times or 18 times. The total ordering Wisesa Tbk can order 3 boxes each time an order is placed to
cost per year (Annual Setup Cost) is recorded at Rp minimize total costs. Reordering should be done when the
862,554.4, and the total storage cost per year (Annual Holding inventory reaches 2 boxes to ensure that the inventory does
Cost) is Rp 862,554.3. Thus, the total inventory cost (Total not run out before the next shipment arrives. Safety Stock of 1
Inventory Holding + Setup Cost) is Rp 1,725,109.0, while the box is kept as a buffer to overcome uncertainty in demand and
unit cost (Unit Costs, PD) is Rp 148,800,000, making the total lead time.
annual cost (Total Cost including units) Rp 150,525,100.
 Sulfate

Fig 7 EOQ Calculation for Sulfate

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Calculations show that the Optimal Order Quantity (Q*) Safety Stock = 0.5 - 0.231
is 1.58 boxes, which is usually rounded up to 2 boxes for Safety Stock = 0.269 box ≈ 1 box
practical purposes. The maximum inventory level (Imax) that
can be achieved after the new order arrives is 2 boxes, while  Reorder Point (ROP) Calculation
the average inventory held during a period (Average
Inventory) is about 0.79 boxes or 1 box. ROP = (Average Daily Demand * Average
Lead time) + Safety Stock
The number of orders to be placed per year (Orders per ROP = (0.033×7) + 1
Period, N) is about 7.57 times or 8 times. The total ordering ROP = 0.231 + 1
cost per year (Annual Setup Cost) is recorded at Rp ROP = 1.231 boxes ≈ 2 boxes
378,681.9, and the total storage cost per year (Annual Holding
Cost) is Rp 378,681.9. Thus, the total inventory cost (Total PT Fajar Surya Wisesa Tbk can order 2 boxes each time
Inventory Holding + Setup Cost) is IDR 757,363.9, while the an order is placed to minimize the total cost. Reordering
unit cost (Unit Costs, PD) is IDR 28,680,000, making the total should be done when the inventory reaches 2 boxes to ensure
annual cost (Total Cost including units) IDR 29,437,360. that the inventory does not run out before the next shipment
arrives. Safety Stock of 1 box is kept as a buffer to overcome
 Safety Stock (SS) Calculation uncertainty in demand and lead time.

Safety Stock = (Maximum Daily Demand * Maximum Lead  Phosphate

time) - (Average Daily Demand * Average Lead time)
Safety Stock = (0.05×10) - (0.033×7)

Fig 8 EOQ Calculation for Phosphates

The calculation shows that the most optimal order Safety Stock = (0.1×10) - (0.067×7)
quantity (Optimal Order Quantity, Q*) is 2.54 boxes, which is Safety Stock = 1-0.469
usually rounded up to 3 boxes. The maximum inventory level Safety Stock = 0.531 box ≈ 1 box
(Imax) that can be achieved after the new order arrives is 3
boxes, while the average inventory held during a period  Reorder Point (ROP) Calculation
(Average Inventory) is about 1.27 boxes or 2 boxes.
ROP = (Average Daily Demand * Average
The number of orders to be placed per year (Orders per Lead time) + Safety Stock
Period, N) is about 9.45 times or 10 times. The total ordering ROP = (0.067×7) + 1
cost per year (Annual Setup Cost) is recorded at IDR ROP = 0.469 + 1
472,440.5, and the total storage cost per year (Annual Holding ROP = 1.469 boxes ≈ 2 boxes
Cost) is IDR 472,440.5. Thus, the total inventory cost (Total
Inventory Holding + Setup Cost) is Rp 944,880.9, while the PT Fajar Surya Wisesa Tbk can order 3 boxes each time
unit cost (Unit Costs, PD) is Rp 44,640,000, making the total an order is placed to minimize the total cost. Reordering
annual cost (Total Cost including units) Rp 45,584,880. should be done when the inventory reaches 2 boxes to ensure
that the inventory does not run out before the next shipment
 Safety Stock (SS) Calculation arrives. Safety Stock of 1 box is kept as a buffer to overcome
uncertainty in demand and lead time.
Safety Stock = (Maximum Daily Demand * Maximum Lead
time) - (Average Daily Demand * Average Lead time)

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 Water Hardness

Fig 9 EOQ Calculation for Water Hardness

The calculation shows that the most optimal order Safety Stock = (0.13×10) - (0.1×7)
quantity (Optimal Order Quantity, Q*) is 3.29 boxes, which is Safety Stock = 1.3-0.7
usually rounded up to 3 boxes. The maximum inventory level Safety Stock = 0.6 box ≈ 1 box
(Imax) that can be achieved after the new order arrives is 3.29
boxes, while the average inventory held during a period  Reorder Point (ROP) Calculation
(Average Inventory) is about 1.65 boxes or 2 boxes.
ROP = (Average Daily Demand * Average
The number of orders to be placed per year (Orders per Lead time) + Safety Stock
Period, N) is about 10.93 times or 11 times. The total ordering ROP = (0.1×7) + 1 ROP = 0.7 + 1
cost per year (Annual Setup Cost) is recorded at Rp 546,626, ROP = 1.7 boxes ≈ 2 boxes
and the total storage cost per year (Annual Holding Cost) is
Rp 546,626. Thus, the total inventory cost (Total Inventory PT Fajar Surya Wisesa Tbk can order 3 boxes each time
Holding + Setup Cost) is Rp 1,093,252, while the unit cost an order is placed to minimize the total cost. Reordering
(Unit Costs, PD) is Rp 59,760,000, making the total annual should be done when the inventory reaches 2 boxes to ensure
cost (Total Cost including units) Rp 60,853,250. that the inventory does not run out before the next shipment
arrives. Safety Stock of 1 box is kept as a buffer to overcome
 Safety Stock (SS) Calculation uncertainty in demand and lead time.

Safety Stock = (Maximum Daily Demand * Maximum Lead  Reagent Set, Aluminum Alloy
time) - (Average Daily Demand * Average Lead time)

Fig 10 EOQ Calculation for Reagent Sets

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The calculation shows that the most optimal order Safety Stock = (0.05×10) - (0.033×7)
quantity (Optimal Order Quantity, Q*) is 1.58 boxes, which is Safety Stock = 0.5 - 0.231
usually rounded up to 2 boxes. The maximum inventory level Safety Stock = 0.269 box ≈ 1 box
(Maximum Inventory Level, Imax) that can be achieved after
the new order arrives is 1.58 boxes, while the average  Reorder Point (ROP) Calculation
inventory held during a period (Average Inventory) is about
0.79 boxes or 1 box. ROP = (Average Daily Demand * Average
Lead time) + Safety Stock
The number of orders to be placed per year (Orders per ROP = (0.033×7) + 1
Period, N) is about 7.59 times or 8 times. The total ordering ROP = 0.231 + 1
cost per year (Annual Setup Cost) is recorded at Rp ROP = 1.231 boxes ≈ 2 boxes
379,473.3, and the total storage cost per year (Annual Holding
Cost) is Rp 379,473.3. Thus, the total inventory cost (Total PT Fajar Surya Wisesa Tbk can order 2 boxes each time
Inventory Holding + Setup Cost) is IDR 758,946.6, while the an order is placed to minimize the total cost. Reordering
unit cost (Unit Costs, PD) is IDR 28,800,000, making the total should be done when the inventory reaches 2 boxes to ensure
annual cost (Total Cost including units) IDR 29,558,950. that the inventory does not run out before the next shipment
arrives. Safety Stock of 1 box is kept as a buffer to overcome
 Safety Stock (SS) Calculation uncertainty in demand and lead time.

Safety Stock = (Maximum Daily Demand * Maximum Lead  HACH COD KIT Reagent
time) - (Average Daily Demand * Average Lead time)

Fig 11 EOQ Calculation for COD HACH KIT Reagents

Based on the calculation results from POM for Windows Cost) is Rp 718,331.4. Thus, the total inventory cost (Total
(POM QM) software for the chemical Reagent KIT HACH Inventory Holding + Setup Cost) is Rp 1,436,663.0, while the
COD, the annual demand rate is recorded at 24 boxes per unit cost (Unit Costs, PD) is Rp 103,200,000, making the total
year. The ordering cost per order is Rp 50,000, while the annual cost (Total Cost including units) Rp 104,636,700.
holding/carrying cost per unit per year is Rp 860,000 per box,
with a unit cost of Rp 4,300,000 per box.  Safety Stock (SS) Calculation

The calculation shows that the most optimal order Safety Stock = (Maximum Daily Demand * Maximum Lead
quantity (Optimal Order Quantity, Q*) is 1.67 boxes, which is time) - (Average Daily Demand * Average Lead time)
usually rounded up to 2 boxes. The maximum inventory level Safety Stock = (0.1×10) - (0.067×7)
(Maximum Inventory Level, Imax) that can be achieved after Safety Stock = 1 - 0.469
the new order arrives is 1.67 boxes, while the average Safety Stock = 0.531 box ≈ 1 box
inventory held during a period (Average Inventory) is about
0.84 boxes or 1 box.  Reorder Point (ROP) Calculation

The number of orders to be placed per year (Orders per ROP = (Average Daily Demand * Average Lead time) +
Period, N) is about 14.37 times or 15 times. The total ordering Safety Stock ROP = (0.067×7) + 1
cost per year (Annual Setup Cost) is recorded at Rp ROP=0.469 + 1
718,331.4, and the total storage cost per year (Annual Holding ROP=1.469 boxes ≈ 2 boxes

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PT. Fajar Surya Wisesa Tbk can order 2 boxes each time continuous improvement to ensure inventory remains at
to minimize total costs, with reordering done when inventory optimal levels according to operational needs.
reaches 2 boxes to ensure supplies do not run out before the
next delivery. A Safety Stock of 1 box is maintained as a  For Universities
buffer to address uncertainties in demand and lead time. Prior
to implementing the EOQ method, PT. Fajar Surya Wisesa  Incorporate the research findings into academic discourse
Tbk faced significant inventory issues. Overstock reached at both the faculty and university levels.
375%, indicating an imbalance between available materials  Use this research as additional material for research
and actual company needs. Additionally, around 34% of the references and learning at Universitas Pelita Bangsa.
inventory expired before use, resulting in substantial losses.
Chemical usage varied, but on average only required 12-24 ACKNOWLEDGMENT
boxes per year, showing that existing inventory far exceeded
actual needs, leading to high storage and ordering costs. In this article, our gratitude is directed towards those
who have contributed to the research and development of
Before adopting the EOQ method, the company did not chemical inventory management in the Waste Water
have specific calculations for Reorder Point (ROP) and Safety Treatment Plant (WWTP) Laboratory department of PT. Fajar
Stock (SS). Orders were typically based on estimates or when Surya Wisesa Tbk.
stock was nearly depleted, without considering lead time or
demand, and additional inventory storage was done without We extend our sincere thanks to all parties who
clear calculations to anticipate demand or lead time contributed to this research. We are grateful to PT. Fajar
uncertainties. This irregular planning resulted in many unused Surya Wisesa Tbk for their support and access to conduct
materials, causing wastage and inefficiency. observations and data collection at their WWTP laboratory.
Special thanks to the interviewees who provided valuable
V. CONCLUSIONS AND SUGGESTIONS insights and dedicated their time to share their perspectives on
chemical inventory management. We also appreciate previous
A. Conclusion research that laid the theoretical foundation and provided
relevant case studies in applying the Economic Order
 Based on the calculations, efficient EOQ quantities are Quantity (EOQ) method within industrial contexts.
determined as follows: Ammonia Nitrogen: 3 boxes per
order, Sulfate: 2 boxes per order, Phosphate: 3 boxes per All contributions have been instrumental in expanding
order, Water Hardness: 3 boxes per order, Aluminum our understanding of the importance of efficient and
Aluminion Reagent Set: 2 boxes per order, and HACH sustainable inventory management. Through this
COD Reagent KIT: 2 boxes per order. collaboration, we hope that the findings of this research will
 According to the ROP calculations for various types of contribute meaningfully to the development of best practices
chemicals, the Reorder Point is determined to be every 6 in chemical inventory management in the industry and inspire
weeks, with each order consisting of 2 boxes per chemical. further research in this field.
 The calculated Safety Stock (SS) determines an optimal
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