Determination of Joint Lot Size using the supply chain approach with Vendor Managed Inventory (VMI) Method at PT. XYZ

Abstract

PT. XYZ is a company producing animal feed products which is located in the Medan Region. This company is a branch of Z Group company based in Surabaya. In the process company business activities, both from the process of ordering raw materials to suppliers up to the sale of products to buyers, often happens planning mismatches in determining production lots so often cause overstock and stockout. This is based on the lack of integration each component in the supply chain. Each component is still using the traditional way that is by making each plan without coordinating with each other. This manufacturing company still needs to do improvements in the production planning system. The absence of the PPIC Department make planning in the production in the company becomes out of control. This study aims to improve the supply chain system by method VMI and determine the optimum combined lot size by the JELS method. The JELS calculation results show an optimal Q of 8,692 bags, with QM for 437,082 bags with a frequency of product shipments 50 times and the frequency of replenishment of raw materials 13 times.