Raw Material Inventory Management of Feed Mill
Peranuch Sonyen, Visit Limsombunchai and Winai Puttakul
This study suggests an alternative approach for managing the raw material inventory of feed mill. The study used the data of an anonymous feed mill in Thailand. The result indicates that the management of feed mill inventory applying the economic order of quantity (EOQ) approach yields a lower inventory cost than that of linear programming (LP) approach. However, EOQ is given a strong assumption that is the demand for raw material and its price are fixed. In the real situation, the demand for raw material depends upon demand on feed, and the price varies due to seasonality. The study found that using LP would be a more appropriate management approach to achieve the reduced cost of raw material inventory of feed mill.
Keywords: raw material inventory, feed mill, economic order of quantity, linear programming
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