Optimization production model and financial feasibility analysis on planning of integrated lontar sugar industry in Rote Ndao District, East Nusa Province, Indonesia

Abstract

Abstract. Fahrizal, Jasman, Nggadung Y, Kartiwan. 2020. Optimization production model and financial feasibility analysis on planning of integrated lontar sugar industry in Rote Ndao, East Nusa Tenggara, Indonesia. Trop Drylands 21: 25-30. In general, lontar (Borassus flabellifer) sugar consists of molded sugar and crystal sugar produced from lontar sap. Both types of sugar can be produced together in one business unit, but in fact, most home industries produce them partially. This research aimed to obtain an optimization of production model and financial feasibility of integrated lontar sugar industry. The linear programming optimization method was used to determine the optimal amount of molded and crystal lontar sugar production with the objective function of profit maximization. The model was validated on lontar sugar home industry in Rote Ndao District, East Nusa Tenggara Province, Indonesia. Scenario of price change and interest rates were used to measure the level of sensitivity of financial feasibility. The results showed that a maximum profit of IDR 186,741 was obtained by producing 47.25 kgs of molded sugar and 57.93 kgs of crystal sugar every day. The financial feasibility analysis of IRR, NPV, and BC indicators showed that the project was still feasible when the sugar price fall down by 10%, the price of lontar sap increased by 20%, and interest rates rose to the level of 24%.