Investigating total cost and service level of parts with different booking type using continuous review method

A hospital equipment company that has large market must maintain their competitiveness both in terms of the quality, price, number of employees, timeliness of delivery, the expansion of marketing, technology development, et all. Problems that faced by hospital equipment companies in Indonesia are often running out of stock of one of the actuator motor parts of the electric bed product. Motor actuator is imported from abroad supplier. These parts should be imported so the availability of goods can be maintained. On the other hand, the import process that takes a long lead time and high costs become a serious problem for the company. In this case study, the supplier offers two types of booking, there are the booking type 1 which is a standard order cost with a long lead time and the booking type 2 which has higher order cost and faster lead time. Here, we investigate the total cost and the service level resulting from both booking types by utilizing a continuous review method. Finally, the result of the research shows that the booking type 1 gives a lower total cost and a higher service level. Therefore, the type 1 is selected for managing the part of motor actuator.