The Determination of Raw Material Inventory Policy with Lost Sales & Shelf Life Consideration (Case Study: PT Frey Abadi Indotama)

• Main Author: KRISEKAPUTRA (NIM : 13413035), JOSHUA
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/22722
• Institution: Institut Teknologi Bandung

Food and Beverage Industry is the sub-sector industry with the highest gross domestic product (GDP) contribution to Indonesia. By 2016, the Food and Beverage Industry contribute up to 5,31% of the country’s total GDP at a growth rate of 8,20%. PT Frey Abadi Indotama is a one of the companies engaged in the Food and Beverage Industry, more specifically the chocolate processing industry. Currently, PT Frey Abadi Indotama has chocolate processing industy’s market share of up to 41%. PT Frey Abadi Indotama manufactures a wide range of chocolate products that are supplied to various companies in Indonesia. <br /> <br /> <br /> In 2016, PT Frey Abadi Indotama is experiencing a decrease in demand up to 5.25%. The decline was due to company’s inability to meet the demand (lost sales) in previous years. This resulted in consumers tend to buy the products from other suppliers. Based on causal effect diagram and pareto diagram, it is found that the root cause of the problem is the absence of procurement of raw materials’ policy in accordance with the characteristic of the raw materials used. These characteristics include the shelf life and lost sales of raw materials. <br /> <br /> <br /> The objective of this research is to determine the optimum inventory policy by considering the shelf life and lost sales for PT Frey Abadi Indotama’s raw material which can minimize the total inventory cost. The reference model used in this research is Muriana (2016) model, which accommodates the state of the system using the policy of lost sales and perishable raw materials. In this study, the exptected total inventory total cost includes, the expected order cost, holding cost, outdated cost, and shortage cost. <br /> <br /> <br /> From the research conducted in PT Frey Abadi Indotama’s warehouse, decision variable is determined for 8 (eight) raw materials of the products. By using the reference model, it was found that the model gave a decrease of expected of total inventory cost up to 15%, from Rp30.251.791.561,00 to Rp25.830.447.084,00 and a minimum service level of 95%.