Markov Chains Slash Inventory Costs in Indonesia
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Keywords

Inventory Control
Markov Chain
Perfect Enumeration
Overstock Management
Construction Materials

How to Cite

Mishani, A. C., & Sukmono, T. (2024). Markov Chains Slash Inventory Costs in Indonesia. Indonesian Journal of Innovation Studies, 25(4), DOI 10.21070/ijins.v25i4.1184. https://doi.org/10.21070/ijins.v25i4.1184

Abstract

PT. Varia Usaha Beton, facing an 8% decline in 2022 targets due to uncontrolled inventory and a 15,150-ton overstock of sand at its BSP Sayung plant, needed an effective solution. This study applied a Markov chain model with perfect enumeration to optimize sand inventory management. Qualitative data from observations, expert interviews, and company records (2021-2022) and quantitative analysis identified Policy 58 as optimal, reducing excess costs to Rp. 32,463,360 monthly. Implementing improvements in specific overstock states (3, 4, 5, and 6) provides a strategic approach to minimize sand overstock and associated costs.

Highlight:

  1. Inventory Decline: 8% target drop due to uncontrolled inventory in 2022.
  2. Optimal Policy: Policy 58 reduced monthly excess costs to Rp. 32,463,360.
  3. Strategic Improvements: Implement changes in states 3, 4, 5, and 6 to manage overstock.

 

Keywoard: Inventory Control, Markov Chain, Perfect Enumeration, Overstock Management, Construction Materials

https://doi.org/10.21070/ijins.v25i4.1184
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