The optimization of inventory control for two-seasons demand and known price increase

Abstract

PT X is one of the raincoats factories located in Central Java, Indonesia. At this time, PT X does not have a good inventory system because it is still based on intuition. This makes stock-out often exists causing the loss of sale. PT X wants to minimize its inventory costs. Demand in PT X is divided into two periods of demand, which is high season and low season. Low season demand period occurs from February until July and high season demand occurs from August until January. PT X experiences the price increase for the material on August 2014. When the price increase is known, a policy can be taken to do a special order. At this time, PT X determines the number of the special order intuitively. We modify the known price increase model to accommodate the demand which is divided into two periods. In this method, the number of special orders is determined to produce the optimum savings. Several studies have been conducted related to the price increase problem, but no consideration is taken for the two seasons demand.