Optimization Strategy for Fertilizer Inventory Control Based on Economic Order Quantity (EOQ) and Period Order Quantity (POQ) to Enhance Efficiency and Profitability (Case Study: PT Pupuk Indonesia)

Abstract

PT Pupuk Indonesia (Persero) is a limited liability company (PT) operating as a state-owned enterprise (BUMN) and serving as Indonesia’s integrated fertilizer holding company. The company’s fertilizer inventory control has faced minor stock shortages and challenges in inventory record-keeping, leading to stock discrepancies and inaccurate data. As a result, the company occasionally failed to fulfill all orders on time. This study aims to optimize inventory control by applying the Economic Order Quantity (EOQ) and Period Order Quantity (POQ) methods to address these issues. The research utilizes company data from January to December 2024. Based on calculations and processes conducted in this study, the total inventory cost for priority fertilizers incurred by the company was IDR 118,928,747, which is higher than the inventory costs calculated using the EOQ method IDR 61,668,354 and the POQ method IDR 83,456,452. Therefore, the company can implement the EOQ method for inventory cost calculations, achieving cost efficiency of IDR 57,260,392 or 48.2%.