IMPROVEMENT OF INVENTORY MANAGEMENT TO REDUCE COST OF BUYING NEW INVENTORY

• Main Author: Warman, Chandra
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57637
• Institution: Institut Teknologi Bandung

Natural gas is one of energy from used for various activities such as cooking, production processes, power generation and others. In 2019, natural gas contributed 23% of the national energy mix. This shows that natural gas has an important role in fulfilling national energy. Natural gas is distributed through gas infrastructure, either through pipelines or other modes of transportation, from gas sources to consumers. PT Perusahaan Gas Negara Tbk. (PGN) is a natural gas distribution and transmission company that controls more than 90% of the natural gas distribution pipeline network in Indonesia. Natural gas infrastructure must be maintained to minimize disruption of gas distribution to customers. PGN stores gas infrastructure materials as inventory to support gas infrastructure reliability if replacement of damaged materials is required. In 2020, inventory level was increasing significantly. The company's inventory level rose 46% over the previous year. One of the reasons for this high inventory is the large amount of inventory purchased in 2020 without an increase in materials demand. The application of safety stock based on the percentage of total material installed on gas infrastructure and inappropriate forecasting methods made order quantity in 2020 increase. The purpose of this research is to evaluate the inventory management applied by the company to reduce the cost of purchasing new materials which results in high inventory level of the company. This research uses qualitative and quantitative approaches to find the root of the problem and provide the right solution to overcome this problem. Implementation of the fixed-time period model can be a solution for improving the company's inventory management. This study uses Pareto analysis to determine which materials have the most influence on the high purchase of new inventories in 2020. Forecasting simulations are carried out on each of these materials to obtain demand forecasts in 2020 based on historical data from 2018 to 2019 using trend projection method. This forecasting method is simulated in two ways, using monthly data and quarterly data. Forecasting results that have lower errors will be used to calculate safety stock and order quantity that should be placed in 2020. According to data processing and analysis results, there are five materials that contribute the most to the high purchase of new inventories in 2020. Trend projection forecasting method using quarterly data provides a lower MAPE value than trend projection forecasting method using monthly data. If the company applies this fixed-time period model, the company can reduce the cost of purchasing new inventory by IDR 6,657,175,192 or 44% of the total cost of purchasing materials.