Economic Order Quantity (EOQ) Method: Analysis of Raw Material Inventory Control (Xyz Hotel Case Study)

Abstract

The goal of the study is to compare the company's use of the EOQ (Economic Order Quantity) approach to that of Hotel XYZ in order to assess how well the latter maintains its raw material inventory. Both quantitative and qualitative research methodologies were employed in this study. Both quantitative and qualitative analysis methodologies were employed in this study. The first step in the data analysis is to compare how much raw material is purchased, how much it costs overall, and how much XYZ Hotel spends using the Economic Order Quantity (EOQ) approach. Based on the study's findings, it is known that employing the Economic Order Quantity (EOQ) approach, which considers safety stock and reorder point while requiring less frequent and larger raw material purchases than the XYZ Hotel, can be more efficient. By doing this, the production process is guaranteed not to be disrupted. Furthermore, there are lower costs associated with the procurement, ordering, and storage of raw materials. As a result, it can reduce the cost of raw material inventory. To be more effective in managing its raw material inventory, XYZ Hotel should employ the Economic Order Quantity (EOQ) technique and consider safety stock and reorder points. This will help to ensure that there is never an excess of raw material (raw material) inventory.