Integration of deterministic and probabilistic inventory methods to optimize the balance between overstock and stockout

Abstract

In inventory management, stockout and overstock are problems that always occur in the inventory system. The limitations of the method make it difficult for companies to determine the level of inventory following probabilistic inventory conditions. Ajeng Gallery is a quality bag craft company that has problems in the supply of raw materials where there is always a large stockout and overstock. The research is limited to cow leather material which is the main material based on the results of ABC analysis. This research also integrates Min-Max method which is a deterministic method to determine the level of inventory then the results will be integrated with Monte Carlo simulation which is a probabilistic method so that it can evaluate the amount of stockout and overstock that occurs. The results showed that the company no longer experienced stockout for 1 month and the amount of overstock decreased by 0.42% of the actual system.