Forecasting and economic order quantity model for inventory control: A case study at XYZ company

Materials or inventories are essential requirements for any company in order to fulfill their customers’ needs and wants. This case study has cooperated with a construction firm, XYZ company which is located at Bukit Batok area, Singapore. The rationale behind the choice of this company is the inefficiency of systematic inventory management process in a fast growing construction company. The company also lack of proper forecasting techniques in predicting accurate demand for its main construction raw materials. Therefore, a suitable inventory control model by using the Economic Order Quantity and forecasting techniques was identified to be implemented in the company. The forecasting techniques were used to predict the optimum demand and Economic Order Quantity was applied to minimised the total inventory cost in order to achieve the research objectives. The end results of the inventory control model was evaluated by decision tree analysis. Data is collected through interview with the targeted respondents which are general managers or core members of the managerial team who have good understanding of the firm especially in the inventory system. The collected data were analysed by QM for Windows software and Microsoft Excel. This study concluded that XYZ company should practice forecasting techniques for some of the raw materials in determining the optimum demand quantity. However, Economic Order Quantity model should applied for all raw material in order to attain optimum total inventory cost.