Optimization of Limestone Inventory System for Safety Stock Control and Reorder Point In The Processing Industry

Abstract

The procurement and management of limestone, the primary raw material, often experience disruptions during production, primarily due to fluctuations in material availability and weather-related constraints at the mining site. The material's rigid characteristics, long processing times, and limited access during the dry season often result in quantities delivered far below required levels, resulting in inventory levels falling below minimum thresholds. This situation highlights the need for a reliable forecasting approach to ensure production continuity. This study aims to determine the optimal quantity of limestone to be supplied by identifying the most accurate forecasting method and establishing recommendations for safety stock and appropriate reorder points. A quantitative time series approach is applied, and several forecasting models are evaluated to determine the most appropriate method for predicting future limestone demand. The analysis shows that the 5-period moving average provides the highest forecasting accuracy, resulting in the lowest error with a MAPE value of 15.81%. Based on this method, the recommended safety stock is 34,719.68 tons for a 90% service level and 53,164.51 tons for a 95% service level. Furthermore, the reorder point should be set at 58,935.03 tons for a 90% service level and 77,379.86 tons for a 95% service level. The results of this study provide practical implications for improving raw material inventory planning. By implementing recommended forecasting methods and inventory control parameters, companies can better anticipate demand fluctuations, reduce the risk of stockouts, and ensure smooth production operations.