COORDINATED INVENTORY POLICY STUDY ON PT X AND PT Y WITH MULTI-ECHELON INVENTORY SYSTEM

• Main Author: Imadur Risalah Jundullah, M.
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/70122
• Institution: Institut Teknologi Bandung

PT X is one of the biggest manufacturing company in the Fast Moving Customer Goods Category in Indonesia. PT Y is one off its subsidiaries that is responsible for distributing PT X’s SKU A product across Indonesia. SKU A’s distribution network can be categorized into two: first distribution route from factory to distribution hub to city depot and second distribution network from factory to distribution hub to regional depot, then to city depot. PT X’s company standard in terms of order unfulfillment rate for PT Y is about 5%. It means, PT X has a standard so that PT Y’s lost sales do not exceed 5%. In 2021, SKU A product contributed to around 68,21% from all lost sales per month. SKU A also has average lost sales around 28% of the value of total value of its demand per month. This happened due to uncoordinated inventory policy between PT X and PT Y and PT Y’s unintegrated inventory policy between each of its echelons. In this research, an inventory policy study between coordinated PT X and PT Y was done with multi echelon inventory system model to create an inventory policy that is integrated between all of PT Y’s echelons. PT Y’s inventory policy will be the baseline to coordinate with PT X. In this research, two types of distribution network models will be studied, which are two and three network echelon models. Two models that were developed have decision variables which are lot size and reorder point in each echelon. To put it in the big picture, lot sizes in every echelon increased relative to current situation. Two echelons network model was able to reduce inventory cost up to Rp 199.995.379 (28,67%) and three echelons network model was able to reduce inventory cost up to Rp 707.784.312 (19,18%).