PRODUCTION PLANNING OPTIMIZATION FOR AMMONIA AND UREA WITH FORECASTING APPROACH AT PT PUPUK KALIMANTAN TIMUR

• Main Author: Elysia Dharmawangsa, Alvina
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/36376
• Institution: Institut Teknologi Bandung

PT. Pupuk Kalimantan Timur (Pupuk Kaltim) is a stated-owned company which produces nitrogen-based fertilizer such as Ammonia, Urea, and NPK. Pupuk Kaltim is responsible for fulfilling the requirement of subsidized fertilizer in two-thirds of Indonesia territory. A chemical reaction between Ammonia and carbon dioxide will produce Urea. Each ton of Ammonia can produce approximately two tons of Urea. In some conditions, it would be more profitable to sell Ammonia rather than to use it to produce Urea. Since the priority is selling Urea to support the National Food Security Program, this will be the boundary for the company to sell its Ammonia product as much as possible since the Ammonia must be used in Urea production. The performance of the company is determined from several parameters such as production and profit, thus Pupuk Kaltim must take several strategic steps to achieve the target determined by shareholders. Due to commodity price fluctuation, the profit target could not be achieved if the company only pursue the target of production. The company needs to increase sales with the best margins to maximize its profit. In order to be able to have flexibility in selling Ammonia and Urea, the company must have stock availability. The right production planning will give the best opportunity for the company to achieve optimum profit and meet the target from shareholders. At 2015 the Ammonia price was high, but Urea price dropped and the company had suffered loss from it. This condition opened an opportunity for the company to maximize its profit by switching its product and selling more Ammonia than Urea. Thus, Pupuk Kaltim chose to pursue its profit target but the consequence was to “sacrifice” its production target. From the Current Reality Tree, the root causes of the problem are the global commodity price fluctuation and the production rate settings are not optimum. The global commodity price is uncontrollable factor, but the production rate setting is controllable factor. The strategy that could eliminate or at least minimize the undesirable effect is to propose the optimum production planning. By optimizing production planning, the company could achieve its most optimum production rate by considering the balance between production target and profit target. Using the commodities price forecasting, the company could predict which product that will give higher profit margin. This knowledge could be used for production planning. For forecasting itself, the Artificial Neural Network forecasting is developed using WEKA software. The most suitable model for Ammonia prices FOB Southeast Asia forecasting is 2,6-2,7 hidden layer model. While for Urea Prill and Granule prices FOB Southeast Asia forecasting, the most suitable model is 2,2-2,3 hidden layer model. This model could change following the global economic condition. Periodic simulation using ANN will give higher accuracy. Solver function was used as optimization tool to calculate the best production rate combination. The optimization was done by considering the capacity of each plant and the margin of each commodity. The commodity that gives higher profit margin could be maximized. Using combination of commodity price forecasting and production optimization, the company’s targets are expected to be achieved.