The Study of the Economic Order Quantity for the Cost Reduction A Case of World Asia Solution Co., Ltd.

Abstract

The objective of this research is to study economic order quantity for the cost reduction A case of World Asia Solution Co., Ltd." The study involves categorizing inventory items based on their level of importance using the ABC Analysis method as a guideline. Additionally, the research aims to analyze and determine the suitable Economic Order Quantity (EOQ) and Reorder Point (ROP) for efficient inventory management. A sample group from Category A, consisting of 5 items, is used to compare actual ordering practices with the EOQ-based approach. The research findings demonstrate that the EOQ-based ordering method is more suitable and cost-effective than the actual ordering practices in the year 2564. The results show a significant reduction of 13,682 Baht per year in total costs when comparing the EOQ model to the actual ordering practices. This approach also facilitates efficient inventory planning, which was not previously utilized by the case study. Techniques such as the ABC Analysis method for inventory categorization and the determination of the Reorder Point (ROP) are employed in the study. By applying the research outcomes, the case study company can effectively reduce expenses related to procurement, acquisition, and meeting customer demands while utilizing efficient inventory management practices, including the ABC Analysis method and the determination of the Reorder Point. The application of these findings can lead to cost savings and enhanced responsiveness to customer needs.