Application of EOQ to Manage Fertilizer Stockouts Under Uncertain Lead Times: A Case Study of Dangote Sugar Refinery Numan, Nigeria
Abstract
Many companies struggle with knowing how much fertilizer to order and when to order it. At Dangote Sugar Refinery Numan, frequent stockouts occur partly because delivery times vary unpredictably. This study applies the Economic Order Quantity model with safety stock to account for uncertain lead times. Secondary data on NPK and UREA fertilizer (annual demand, holding cost, ordering cost, price) were collected from the finance department for 2024. Lead time variability was estimated from delivery records, giving a standard deviation of 1.8 days. Results show optimal order quantities of 39,802 bags for NPK and 25,281 bags for UREA. To achieve a 95% service level, reorder points are 963 bags and 430 bags . Total annual inventory costs are ₦1,161,191,088 for NPK and ₦587,056,588 for UREA. The study concludes that EOQ with safety stock effectively prevents stockouts despite lead time variability. Management should track lead times, set a service level, and adopt the calculated reorder points.
Keywords
References
More Articles from INTERNATIONAL JOURNAL OF APPLIED SCIENCES AND MATHEMATICAL THEORY
Author: Samson Yunusa, Imande Terdon Terlumun,, Etuk Emmanuel Dan, and Micah Michael
Author: Ejes, Valentine, Liberty Ebiwareme
Author: Uwakwe, J. I., Anyanwu, E., Inalegwu, N.
Author: Xi Yang, Wenzhuo Zhang
Author: Olamiji Onafowokan1, Olawale Fadugba2, Deborah Okunola1, Alex Mendy1
