MITIGATE LOST SALES USING INVENTORY MANAGEMENT IN RAHINA INDONESIA

• Main Author: Taufiqurrahman
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/39107
• Institution: Institut Teknologi Bandung

Fashion is one important industry for Indonesia which has a significant growth and huge contribution as a subsector in creative economy industry sector. The number of business in this industry is keep growing. This reflect that fashion provide big opportunity and has promising potential in the future. It is common that uncertain demand in this industry happened. The effect of this uncertainty makes a lot of company fail to predict the upcoming demand and provide insufficient amount of inventory during the business. One company which has the same problem is Rahina Indonesia. Rahina Indonesia is a company in fashion industry which sell fashion products especially hijab in Bandung. Their products including voal printed scarfs, voal basic, cotton import, scarf, bandana, etc. Rahina Indonesia also provide fashion for child including shirt, pants, hijab, and scarf. During the business, the company face several problems and the main problem is high level of lost sales. From the historical data of sales and demand, it is clarified that high lost sales level become serious problem since the company losing their potential revenue or profit from losing 1 unit sales. Hence, one of the objective of this research is to find the root cause of high lost sales level that resulting the recommendation for the company. Currently, Rahina Indonesia using qualitative forecasting method based on the CEO judgement to make planning on their inventory management. The result of forecasting is often not match with the actual demand. In determining the root cause of the problem, root cause analysis tool was used and turns out that the root cause are unsuitable forecasting demand method and inappropriate inventory system. Thus, another objective on this research is finding the best forecasting demand method for the product and finding the most suitable inventory management model. In choosing the most suitable forecasting demand method, analysis of demand pattern needs to be clear at the first step. It found out that the demand of the company has seasonality and trend. Thus, the potential forecasting demand method is Time Series Decomposition, Holt-Winter’s Method, and Seasonal ARIMA. Among these three methods, the best and most suitable with Rahina Indonesia’s demand product is Time Series Decomposition with Multiplicative model. This forecasting demand method has proven to mitigate amount of lost sales by comparing the predicted demand with the historical data. The existing inventory management is one of the causes of high level of lost sales. In determining the proper and suitable model for the company, the assumption of each model need to be matched with company’s condition. EOQ with probabilistic model is inventory management that matched with the company’s variable demand with constant lead time. Also, probabilistic model provided the safety stock and reorder point to prevent the lost sales. EOQ model is used to obtain amount of economic order quantity. Compared with the existing inventory model, the proposed inventory model which is EOQ with probabilistic model provide huge amount of cost saving. The research give recommendation for the company to implement the proposed forecasting and inventory management model to mitigate the lost sales and providing more accurate inventory planning