979 JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991
WEBSITE-BASED INVENTORY CONTROL APPLICATION USING THE METHOD ECONOMIC ORDER QUANTITY AND ROP REORDER POINTS
Oleh : Suriati Sitepu 1) Victor Tarigan 2)
University Of North Sumatera 1) Sam Ratulangi University 2)
E-mail:
[email protected] 1) [email protected] 2)
ABSTRACT
UD.Gokkon Tani is a family-owned business in Balimbingan, Tanah Jawa District, Simalungun Regency. The problems that occur at UD.Gokkon Tani start from the process of recording data on goods sold, the process of recording purchases of goods and the process of recording stock of goods. The impact of this manual process is that problems often occur in handling inventory such as errors in determining the amount of inventory. which will be ordered to suppliers, there is often an out of stock of goods, there is often an excessive supply of goods resulting in a buildup of goods in the warehouse. To prevent this from happening again, the Economic Order Quantity and Reorder Point methods are used to minimize calculation errors in carrying out inventory and the process of saving capital in the costs of storing and shipping goods. Using the PHP programming language can produce a website application that can calculate EOQ and ROP and the results of these two methods can save Total Inventory Cost compared to company calculations so far
Keywords: Economic Order Quantity, Reorder Point, Inventory, Supply, Website
1. INTRODUCTION
Advances in information technology are increasingly rapid, pushing every aspect as well as in the increase in information technology, this is also done in the business sales industry. The industry requires a computerized information system because this is because a computerized system has many advantages compared to a manual system. This development is also related to most business people such as shops completing work manually. The success of business people in maintaining their business is inseparable from the management of inventory that can meet consumer needs.
Controlling the amount of inventory is one of the most important factors in optimizing inventory. Inventory control is an activity in managing inventory so that it meets the needs and remains stable .
UD.Gokkon Tani is a family-owned business in North Sumatera. The problems that occur with UD.Gokkon Tani start from the process of recording data on goods sold, the process of recording purchases of goods and the process of recording stock of goods. The current inventory handling system is still conventional, namely the inventory data collection process is still carried out by recording on paper and not yet in
computerized form. The impact of this manual process is that there are often problems in handling inventory, such as errors in determining the amount of inventory to be ordered from suppliers, frequent stock outs, excessive inventory, resulting in accumulation of goods in the warehouse. This happens, because the types/items of goods are quite a lot and varied, so it is very difficult for managers/officers to control the stock of goods one by one manually.
By taking advantage of current technological developments and information systems, a web-based system will be created that can assist UD.Gokkon Tani in processing data on the purchase of goods and sales of goods which have been done manually so as to minimize errors in the data input process, speeding up the process searching for data, and simplifying the calculation process both in selling goods to consumers and purchasing goods from suppliers. For inventory processes and stock control. Companies can use the Economic Order Quantity (EOQ) method, with the EOQ method you can find out the most economical purchase amount at each purchase and EOQ is also supported by the Reorder Point (ROP) method. The ROP method is used to calculate when a company orders goods again, if the ROP calculation is not accurate, there will be a possibility of a stock shortage and can add
additional storage costs (Extra Carrying Cost).
With the existence of an inventory information system that applies the web- based Economic Order Quantity (EOQ) method, it is expected that companies can carry out planning, procurement and inventory control properly, efficiently in terms of time and can update information more quickly and have a wide range.
Besides that, it can also produce reports that are accurate, precise and effective in a company .
In general, calculations using the EOQ method are influenced by ordering costs, storage costs and purchasing costs.
Ordering costs are obtained directly from the company with a total for a year.
Storage costs are estimated based on the average storage for one year. By using the EOQ method, safety stock can also be calculated, and also the optimal reorder point for the company so as to avoid shortages or excess inventory.
2. LITERATURE REVIEW
A. Economic Order Quantity (EOQ) Calculation Methods of Economic Order Quantity (EOQ) is a technique to control
the supply of
products that aim to minimize the cost of supply of products or raw materials, with EOQ can determine the number of reservations (Order Quantity) to reduce the
981 JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991
amount of the costs of ordering, storage and maintenance supplies, then is also used to estimate the exact schedule of the order goods in the future [8]. EOQ formula is as follows
√ (1)
Information :
EOQ = (Economic Order Quantity) is the optimal purchase quantity.
D = (Annual Demand) is the use of raw materials for 1 year.
S = (Setup/Ordering Cost) is the cost of ordering each time you order.
H = (Holding/Carrying Cost) is the cost of storing goods per period
This EOQ model considers both operating costs and financial costs and determines the order quantity that will minimize the overall inventory costs.
Thus, this EOQ model not only determines the optimal order quantity, but more importantly, it concerns the financial aspects of decisions about the order quantity [9].
B. Safety Stock
Safety Stock is an inventory that is carried out to protect or maintain the possibility of a shortage of goods, due to the use of goods that are larger than originally estimated or delays in receiving goods that
have been ordered from suppliers [9]. The formula used in calculating safety stock is (
) (2)
Information :
SS = Total anticipated
inventory (per unit).
Maximum Usage = The highest purchasing unit in a year (in 1 month).
Average Usage = The average cost of purchasing goods in a year.
Lead Time = Time needed to receive an order.
C. Reorder Point (ROP)
ROP is the point at which the company must place an order again so that the arrival or receipt of the ordered goods is on time. The formula for calculating Reorder Points is
( ) (3) Information :
ROP = Reorder point.
LD = waiting time (lead time).
AU = Average cost of purchasing goods in a year.
SS = reserve inventory (safety stock)
3. RESEARCH METHODS A. System Planning
The analysis stage is the research stage used to find data on UD.Gokkon Tani regarding the amount of purchasing data
and sales data in 2022, ordering cost data, and storage cost data. Furthermore, from the data obtained, an analysis was carried
out using the EOQ and ROP method. The EOQ flowchart implemented in UD.Gokkon Tani
START
determine purchasing data, sales data, ordering costs, storage costs,
and holding costs
EOQ = √(2×D×S)/H
Get the optimal number of orders
(EOQ)
Determine the number of purchase frequency (F) : Total Sales Of Goods F = --- Optimal Number Of Orders
Get the number of purchase frequency (F)
Specifies the distance for each order : 365
T= --- Purchase Frequency
Distance for each order (T)
A
A
Get Safety Stock SS=( Maximum Usage-Average
Usage )×Lead Time
Get the amount of safety stock
Reorder point ROP =( D×T )+SS
Get the amount of ROP
Total Inventory Cost TIC= √(2 .D.S.h)
Get the amount of TIC
END
Figure 1. Flow System EOQ and ROP The explanation of Figure 1 is as follows:
1. Determine sales data, purchases, ordering costs, storage costs, and holding costs.
2. After that, look for the EOQ value by using the EOQ equation to look for inventory in the future.
3. Determine the purchase frequency with the purchase frequency formula.
4. Determine the optimal distance for each order or order made every year.
5. After getting the EOQ value, the purchase frequency value, and the distance value for each order, then do a
safety stock calculation to protect or guard against the possibility of a shortage of goods, due to the use of goods that are larger than originally estimated or delays in receiving goods that have been ordered from suppliers.
6. After getting the safety stock value, do a search for the reorder point value for the company to place an order again so that the arrival or receipt of the ordered goods is on time.
7. And finally, do a TIC search, which aims to prove that with the optimal number of purchases of merchandise,
983 JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991
which is calculated using the EOQ method, a minimum total cost of merchandise inventory will be achieved.
8. In order to obtain the optimal amount of inventory for the next period that must be provided and the amount of expenditure that must be provided by UD.Gokkon Tani.
B. System Development Method
As for system development here, use the Waterfall method. The Waterfall Model is a model that proposes an approach to systematic and sequential software development that starts at the level and progress of the system throughout analysis, design, code, testing, and maintenance [7]
Requirement
Design
Implementation
Verification
Maintenance
Figure 2. Method Waterfall Figure 2 represents the stages that must be
passed in the waterfall model, including:
needs analysis, system design, code writing, program testing, and program implementation and maintenance. Data collection techniques used are related to research needs, namely observation and interviews
4. RESULTS AND DISCUSSION
Calculation of Economic Order Quantity (EOQ)
Before carrying out the EOQ calculation, it is necessary to know the historical purchase data and sales data for pesticides that exist at UD.Gokkon Tani for a period of 1 year. Pest poison purchase data can be seen in table 1. and sales data can be seen in table 2.
N o
Name Of Goods
Sales Month Amou
nt
Avg
1 2 3 4 5 6 7 8 9 10 11 12
1. Round- Up
21 4
28 6
26 0
25 0
30 2
18 5
25 3
23 0
27 1
29 8
23 1
18 0
2.960 246,6 66 2. Gramox
one
19 2
17 6
22 6
20 1
23 0
18 1
23 0
28 9
27 6
27 4
26 9
22 1
2.765 230,4 16 3. Basmila
ng
28 9
29 0
33 8
34 3
31 0
29 7
26 1
28 5
25 7
26 7
26 0
23 6
3.433 286,0 83 4. Santaqua
t
19 0
22 3
19 5
20 6
13 5
20 6
15 6
15 2
16 6
19 7
15 1
16 8
2.145 178,7 5 5. Nara-UP 14
4 21
2 20
3 20
6 23
5 18
1 22
8 25
9 20
8 20
6 18
8 17
3
2.443 203,5 83 6. Noxone 24
7 24
6 22
5 23
2 22
7 23
8 25
5 18
8 23
6 23
1 19
5 21
5
2.735 227,9 16 7. Tridaxon
e
15 5
17 5
14 6
15 7
15 5
16 7
14 8
16 4
15 4
19 6
17 4
16 2
1.953 162,7 5 8. Gosong-
Top
14 1
16 8
15 8
16 4
17 5
16 2
15 7
16 9
17 6
15 5
16 6
17 9
1.970 164,1 66 9. Bravoxo
ne
19 8
19 3
21 9
20 2
23 6
20 5
22 2
23 2
22 1
19 7
19 9
20 4
2.528 210,6 6 10. Ranger 15
4 19
2 20
7 19
7 20
2 20
3 19
0 20
3 19
5 17
1 15
4 16
2
2.230 185,8 3 N
o
Name Of Goods
Purchase Month Amou
nt
Avg
1 2 3 4 5 6 7 8 9 10 11 12
1. Round- Up
22 0
30 0
24 0
26 0
30 0
20 0
26 0
22 0
28 0
30 0
26 0
20 0
3.040 253,3 33 2. Gramox
one
20 0
18 0
30 0
16 0
24 0
22 0
20 0
26 0
30 0
22 0
30 0
20 0
2.780 231,6 66 3. Basmila
ng
34 0
30 0
32 0
36 0
32 0
30 0
28 0
26 0
24 0
28 0
26 0
22 0
3.480 290 4. Santaqua
t
24 0
26 0
20 0
18 0
16 0
14 0
16 0
14 0
16 0
20 0
16 0
16 0
2.160 180 5. Nara-UP 20
0 20
0 22
0 18
0 24
0 20
0 22
0 24
0 22
0 20
0 20
0 16
0
2.480 206,6 66 6. Noxone 30
0 26
0 20
0 24
0 22
0 26
0 24
0 20
0 22
0 24
0 20
0 20
0
2.780 231,6 66 7. Tridaxon
e
20 0
18 0
16 0
14 0
16 0
18 0
14 0
16 0
16 0
18 0
20 0
14 0
2.000 166,6 66 8. Gosong-
Top
10 0
16 0
16 0
16 0
18 0
16 0
16 0
16 0
18 0
16 0
16 0
18 0
2.020 168,3 34 9. Bravoxo
ne
24 0
20 0
22 0
20 0
24 0
20 0
22 0
24 0
22 0
20 0
20 0
20 0
2.400 200
Table 1. Data on Purchase of Wild Plant Poison Types for 2022
Table 2. Data on Purchase of Wild Plant Poison Types for 2022
985 JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991
Ordering costs consist of shipping costs and unloading costs. Can be seen in table 3.
Table 3. Order Cost Details
No Name of Goods Shipping Costs Unloading Fee Amount 1. Round-Up Rp. 1.064.000 Rp 120.000 Rp 1.184.000 2. Gramoxone Rp. 973.000 Rp 120.000 Rp 1.093.000 3. Basmilang Rp. 1.218.000 Rp 120.000 Rp 1.338.000 4. Santaquat Rp 756.000 Rp 120.000 Rp 876.000 5. Nara-UP Rp 868.000 Rp 120.000 Rp 988.000 6. Noxone Rp 973.000 Rp 120.000 Rp 1.093.000 7. Tridaxone Rp 700.000 Rp 120.000 Rp 820.000 8. Gosong-Top Rp 707.000 Rp 120.000 Rp 827.000 9. Bravoxone Rp 840.000 Rp 120.000 Rp 960.000 10. Ranger Rp 798.000 Rp 120.000 Rp 918.000
For the percentage of storage costs, the price of poison per bottle, the storage costs for pesticides can be seen in table 4.
Tabel 4. Percentage of Storage Cost, Price Per Bottle, Storage Cost No Name of Goods %Save Cost Price (Rp)/ Bottle Storage Fee
1. Round-Up 5% Rp. 95.000 Rp. 4.750
2. Gramoxone 5% Rp. 98.000 Rp. 4.900
3. Basmilang 5% Rp. 120.000 Rp. 6.000
4. Santaquat 5% Rp. 70.000 Rp. 3.500
5. Nara-UP 5% Rp. 75.000 Rp. 3.750
6. Noxone 5% Rp. 90.000 Rp. 4.500
7. Tridaxone 2% Rp. 60.000 Rp. 1.200
8. Gosong-Top 2% Rp. 60.000 Rp. 1.200
9. Bravoxone 5% Rp. 75.000 Rp. 3.750
10. Ranger 2% Rp. 65.000 Rp. 1.300
Storage costs consist of warehouse maintenance and cleaning costs and electricity costs.
Details of storage costs can be seen in table 5.
Tabel 5. Storage Cost Details
No Information Cost
1. Warehouse maintenance and cleaning Rp. 720.000
2. Electricity Rp. 600.000
Amount Rp. 1.320.000
Sales of pesticides and the cost of ordering pesticides can be seen in table 6.
Tabel 1. Sales of Goods and Order Fees.
No Name of Goods Sales Order Fee
Amount Price (Rp)/ Bottle
1. Round-Up 2.960 Bottle Rp. 95.000 Rp. 1.184.000 2. Gramoxone 2.765 Bottle Rp. 98.000 Rp. 1.093.000 3. Basmilang 3.433 Bottle Rp. 120.000 Rp. 1.338.000 4. Santaquat 2.145 Bottle Rp. 70.000 Rp. 876.000 5. Nara-UP 2.443 Bottle Rp. 75.000 Rp. 988.000 6. Noxone 2.735 Bottle Rp. 90.000 Rp. 1.093.000 7. Tridaxone 1.953 Bottle Rp. 60.000 Rp. 820.000 8. Gosong-Top 1.970 Bottle Rp. 60.000 Rp. 870.000 9. Bravoxone 2.528 Bottle Rp. 75.000 Rp. 960.000 10. Ranger 2.230 Bottle Rp. 65.000 Rp. 918.000
From the data above, the EOQ calculation will be carried out for each item
1. Round-up
√
With the Frequency of Purchase of Round Up poison items or rounded to 2
Order Optimal poison round up
2. Gromoxone
√
With the Frequency of Purchase of Gromoxone poison items or rounded to 2
Order Optimal poison Gromoxone
3. Basmilang
√
With the Frequency of Purchase of Basmilan poison items or rounded to 3
Order Optimal poison basmilang
4. SantaQuat
√
With the Frequency of Purchase of santaquat poison items or rounded to 2
Order Optimal poison basmilang
5. Nara-Up
√
With the Frequency of Purchase of nara-up poison items or rounded to 2
Order Optimal poison nara-up
6. Noxone
√
With the Frequency of Purchase of noxone poison items or rounded to 2
Order Optimal poison noxone
7. Tridaxone
√
JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991 987
With the Frequency of Purchase of tridaxone poison items or rounded to 1
Order Optimal poison tridaxone
8. Gosong-Top
√
With the Frequency of Purchase of gosong-top poison items or rounded to 1
Order Optimal poison gosong-top
9. Bravoxone
√
With the Frequency of Purchase of bravoxone poison items or rounded to 2
Order Optimal poison bravoxone
10. Ranger
√
With the Frequency of Purchase of ranger poison items or rounded to 1
Order Optimal poison ranger
Calculation of Safety Stock
Calculation of safety stock can be seen below :
1. Round-up : Safety Stock = ( 300 - 253,333) × 2 = 93,334 bottle
2. Gramoxone : Safety Stock = ( 300 - 231,666) × 2 = 136,668 bottle
3. Basmilang : Safety Stock = ( 340 - 120) × 3 = 210 bottle
4. Santaquat : Safety Stock = ( 200 - 180)
× 2 = 40 bottle
5. Nara-Up : Safety Stock = ( 240 - 206,66) × 2 = 66,68 bottle
6. Noxone : Safety Stock = ( 300 – 231,66) × 2 = 136,68 bottle
7. Tridaxone : Safety Stock = ( 200 – 166,66) × 1 = 33,34 bottle
8. Gosong-Top : Safety Stock = ( 200 - 168,33) × 1 = 31,67 bottle
9. Bravoxone : Safety Stock = ( 240 - 200) × 2 = 80 bottle
10. Ranger : Safety Stock = ( 200 - 190) × 1 = 10 bottle
Calculation of Reorder Point (ROP) Calculation of ROP can be seen below : 1. Round-up : ROP = ( 2 × 253,333) +
93,334 = 600 bottle
2. Gramoxone : ROP = ( 2 × 231,666) + 136,668 = 600 bottle
3. Basmilang : ROP = ( 3 × 290) + 150 = 1.020 bottle
4. Santaquat : ROP = ( 2 × 180) + 40 = 400 bottle
5. Nara-Up : ROP = ( 2 × 206,66) + 66,68 = 480 bottle
6. Noxone : ROP = ( 2 × 231,66) + 136,68 = 600 bottle
7. Tridaxone : ROP = ( 1 × 166,66) + 33,34 = 200 bottle
8. Gosong-Top : ROP = ( 1 × 168,33) + 31,67 = 200 bottle
9. Bravoxone : ROP = ( 2 × 200 ) + 80 = 480 bottle
10. Ranger : ROP = ( 1 × 190) + 10 = 200 bottle
To see more clearly about the calculation of poison supplies at UD.Gokkon Tani can be seen in table 7.
Tabel 2. EOQ, Safety Stock, Reorder Point
No Name of Goods EOQ Safety Stock Reorder Point 1. Round-up 1.214,758 Bottle 93 Bottle 600 Bottle 2. Gramaxone 1.110,643 Bottle 136 Bottle 600 Bottle 3. Basmilang 1.237,383 Bottle 150 Bottle 1.020 Bottle 4. Santaquuat 1.036,207 Bottle 40 Bottle 400 Bottle 5. Nara-Up 1,134,591 Bottle 66 Bottle 480 Bottle 6. Noxone 1.152,650 Bottle 136 Bottle 600 Bottle 7. Tridaxone 1.633,738 Bottle 33 Bottle 200 Bottle 8. Gossong-Top 1.647,821 Bottle 31 Bottle 200 Bottle 9. Bravoxone 1.647,821 Bottle 80 Bottle 480 Bottle 10. Ranger 1.774,667 Bottle 10 Bottle 200 Bottle After getting the EOQ results, then
calculate the total inventory cost. Total Inventory Cost itself is aimed at proving that with the optimal number of purchases of merchandise, which is calculated using the EOQ method, a minimum total cost of merchandise inventory will be achieved.
Below will be shown the results of TIC using UD. Gokkon Tani calculations 1. Round-up : TIC = (253,333 × 4.750) +
(1.184.000 ×12) = Rp. 15.411.331,75 2. Gramoxone : TIC = (231,66 × 4.900) +
(1.093.000 ×12) = Rp. 14.251.134,00 3. Basmilang : TIC = (290 × 6.000) +
(1.338.000 ×12 ) = Rp. 17.796.000,00 4. Santaquat : TIC = (180 × 3.500) +
(876.000 × 12 ) = Rp. 11.142.000,00 5. Nara-Up : TIC (206,66 × 3.750) +
(988.000 × 12 ) = Rp. 12.630.975,00 6. Noxone : TIC (231,66 × 4.500) +
(1.093.000 × 12 ) = Rp. 14.158.470
7. Tridaxone : TIC (166,66 × 1.200) + (820.000 × 12 ) = Rp. 10.039.992,00 8. Gosong-Top : TIC (168,33 × 1.200) +
(827.000 × 12 ) = Rp. 10.125.996,00 9. Bravoxone : TIC (200 × 3.750) +
(960.000 × 12 ) = Rp. 12.270.000,00 10. Ranger : TIC (190 × 1.300) + (918.000
× 12 ) = Rp. 11.263.000
Calculations with the EOQ parameters themselves using the following formula : √ (4)
Information :
D = Number of goods needed in units S = Ordering fee each time an order is made
h = Storage fee
1. Round-up : TIC =
√
= Rp. 5.770.102,25
989 JURNAL DARMA AGUNG, Vol. 30, No. 1, (2022) April : 979 - 991
2. Gramoxone : TIC =
√ = Rp. 5.442.152,23
3. Basmilang : TIC =
√ = Rp. 7.424.301,17
4. Santaquat : TIC =
√ = Rp. 3.626.725,79
5. Nara-Up : TIC =
√ = Rp. 4.254.718,55
6. Noxone : TIC =
√ = Rp. 5.186.925,38
7. Tridaxone : TIC =
√ = Rp. 1.960.485,65
8. Gosong-Top : TIC =
√ = Rp. 1.977.386,15
9. Bravoxone : TIC =
√ = Rp. 4.266.333,32
10. Ranger : TIC =
√ = Rp. 2.307.068,26
The following is a comparison of the values between the TIC EOQ method and TIC by company which can be seen in table 8
Tabel 3. Comparison of TIC by Company and by EOQ
No Nama Racun TIC
UD. Gokkon Tani
TIC
EOQ Savings
1. Round-up Rp.15.411.331,75 Rp.5.770.102,25 Rp.9.641.229,5 2. Gramaxone Rp.14.251.134,00 Rp.5.442.152,23 Rp.8.808.981,77 3. Basmilang Rp.17.796.000,00 Rp.7.424.301,17 Rp.10.371.698,83 4. Santaquuat Rp.11.142.000,00 Rp.3.626.725,79 Rp.7.515.274,21 5. Nara-Up Rp.12.630.975,00 Rp.4.254.718,55 Rp.8.376.256,45 6. Noxone Rp.14.158.470,00 Rp.5.186.925,38 Rp.8.971.544,62 7. Tridaxone Rp.10.039.992,00 Rp.1.960.485,65 Rp.8.079.506,25 8. Gossong-Top Rp.10.125.996,00 Rp.1.977.386,15 Rp.8.148.609,85 9. Bravoxone Rp.12.270.000,00 Rp.4.266.333,32 Rp.8.003.666,68 10. Ranger Rp.11.263.000,00 Rp.2.307.068,26 Rp.8.955.931.74 Implementation Interface
This view displays the results of inventory calculations for a certain period using the Economic Order Point (EOQ) method. Display of the page design results of inventory calculation using the EOQ method can be seen in Figure 3
Figure 3. Display EOQ and ROP on the website 5. CONCLUSION
By implementing the Inventory Control Information System application fertilizers and pesticides with the Economic Order Quantity (EOQ) Method at UD. Gokkon Tani, controlling the supply of fertilizers and pesticides can be overcome and Able to save on total inventory costs at UD.
Gokkon Tani
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