OPTIMAL REPLENISHMENT POLICY OF FUEL PRODUCTS INVENTORY AT PT X IN MOR III WITH MIXED INTEGER LINEAR PROGRAMMING

• Main Author: Yacobson, Felix
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/83931
• Institution: Institut Teknologi Bandung

The state-owned enterprise PT X dominates Indonesia's fuel market, holding 94% of the retail and 75% of the industrial fuel sectors. With one of the world's most complex supply chain networks, thorough planning, especially in inventory systems, is crucial. Stock level mapping reveals frequent instabilities in MOR III of PT X's fuel supply chain, causing unmet demand on certain days. Therefore, an optimal operational-level (day-to-day) decision-making model is required to deliver fuel products at the lowest possible cost while maintaining standard stock levels set through round trip days (RTD). This study develops a Mixed Integer Linear Programming (MILP) model to determine the daily scheduling of both pipelines and ships, ensuring sufficient demand fulfillment for multi-echelon depots at minimal cost. The model incorporates time as an index in inventory (stock level) and decision variables, enhancing the dynamic aspect of daily operational scheduling. Additionally, flow balance across both depot tiers is included to further refine the model's dynamic nature. The final result of this model is the allocation and scheduling of the supply chain comprise of mode assignment, volume of each replenishment, and the time of each replenishment. The results over a 365-day planning horizon indicate that PT X needs 5250 replenishment calls, with 140 by ship and 5110 by pipeline, resulting in a total cost of $140,636,495.28, which is 28.48% less than the existing cost. The main reason behind this is lesser backloading, which is direct effect of more efficient supply inter-depot, which significantly reduce the annual total throughput from 33,142,689.78 KL to 23,381,434.73 KL despite the demand to retail stays exactly the same.