Engine Oil Inventory Management: Comparative Study of Lot-Sizing Methods and Managerial Decision Framework under Cashflow Constraints

Abstract

Abstract. Small and medium-sized enterprises often need to maintain product availability while operating under limited working capital. In this context, a lot-sizing method that minimizes inventory-related costs may still generate purchasing expenditures that are concentrated in particular months and difficult to finance. This study evaluates five established lot-sizing methods namely Wagner-Whitin (WW), Lot-for-Lot (L4L), Economic Order Quantity (EOQ), Periodic Order Quantity (POQ), and Part-Period Balancing (PPB) using data from 13 high-turnover engine-oil SKUs and develops a liquidity-aware policy-selection framework. Order schedules and Total Inventory Cost (TIC) were generated using POM-QM, while cost differences were tested through repeated-measures analysis with Greenhouse-Geisser and Bonferroni adjustments. Monthly purchasing expenditures were then evaluated through violation frequency and cumulative excess under ceilings of IDR 40 million, IDR 50 million, and IDR 60 million. The lot-sizing method significantly affected TIC (p < 0.001). WW generated the lowest aggregate TIC, whereas L4L generated the highest TIC but the lowest cumulative excess across all scenarios. The cost-first and cash-first policies consistently selected WW and L4L, respectively. The balanced policy selected no feasible method at IDR 40 million, EOQ at IDR 50 million, and WW at IDR 60 million. These findings show that inventory-cost efficiency and purchasing-liquidity exposure require separate but integrated evaluation. Keywords: Inventory planning, lot-sizing methods, total inventory cost, liquidity exposure, policy selection