Enhancing Economic Development through Inventory Management Optimization in Agro-based Industries in Bihar: A Comparative Study of EOQ and EPQ Models

Abstract

Inventory management is crucial for optimizing operational efficiency and cost-effectiveness in agro-based industries, particularly in regions like Bihar,known for their agricultural resources. This study compares the effectiveness of two inventory management models, the Economic Order Quantity (EOQ) and Economic Production Quantity (EPQ), in addressing the unique challenges faced by Bihar's agro-based industries. Data from Taruwar Agro Industries Private Limited in Ashiyana, Patna, use to calculate EOQ and EPQ values for three product categories: Tomato Chili, Peri Peri, and Punjabi Tadka. The study employs relevant formulas to compute optimal order quantities and total inventory costs, assuming constant demand, quality, price, holding costs, and ordering costs. Both the EOQ and EPQ models offered viable approaches to inventory optimization. EOQ focused on minimizing holding and ordering costs, while EPQ integrated production-related costs to optimize production flow. The study underscored the importance of aligning inventory management strategies with operational capabilities, market demand, and financial objectives. This study contributes to advancing theoretical understanding and practical applications of inventory management in agro-based economies like Bihar. Recommendations for empirical validation, contextual adaptation, technology integration, and long-term impact assessment are provided to enhance inventory management practices. Integration of the BCG matrix into decision-making processes offers a comprehensive approach to prioritizing inventory management strategies and guiding strategic implications.