Abstract
In order to ensure the delivery of the subsidized fertilizer to the farmer in “6 precision-goals”, i.e., quantity precision, type precision, time precision, place precision, quality precision and price precision in accordance to regulated Highest Retail Sale Price, the government has regulated the distribution system of subsidized fertilizer from the plant to the farmers by form of regulation issued by Indonesian Ministry of Trading. The purpose of this research is to evaluate the existing distribution system of subsidized fertilizer which is managed by one of the Public Service Obligation State-Owned Companies (PSO-SOC). The evaluation is carried out by comparing the cost of the existing distribution system with the proposed distribution system. Cost optimization of the proposed system makes use of Mixed Integer Linier Programing (MILP). Optimization is performed by restructuring the cluster and distribution warehouse, allowing through trips from plant directly to distributor’s warehouse, and skipping the producer’s warehouse storing. The proposed cluster restructuring can reduce the existing cost to 94% - 98%, while through trips can reduce the total cost to 61% - 72%. In case where through trips is allowed and producer’s warehouse is in operation and functioned as a buffer, the total cost is reduced to 64% - 78% from the existing cost. Based on the optimization result, it is concluded that the existing subsidized fertilizer distribution system could be improved by allowing through trips, while existing producer’s warehouse is still in operation as the buffer warehouse to ensure that the minimum stock is fulfilled. It is noted, however, that this system requires adequate information technology concurrently.
Highlights
The government is attaining to improve the productivity and quality of agricultural product in order to sustain the national food security
The distribution of the subsidized fertilizer is carried out by one of the Public Service Obligation State-Owned Companies (PSO-SOC) that is state-owned company which is obliged to serve and provide service and goods commodities required by public
The total subsidy is calculated based on delta amount of total actual cost of subsidized goods spent by PSO-SOC from production until it is received by end-user less than its Highest Retail Sale Price
Summary
The government is attaining to improve the productivity and quality of agricultural product in order to sustain the national food security. Distribution cost in the subsidized fertilizer distribution system is affecting total subsidy which government has to bear and provide to PSO-SOC. Two types of transportation discounts are quantity discounts for inbound transportation cost and distance discounts for outbound transportation cost Their proposed method integrated facility costs, inventory costs, transportation costs and ordering costs. [4] proposed an extension of a multi-agent transport modeling system which dealt with the behavior of each individual actor in the freight distribution system, the interactions amongst freight agents. It modeled the links between suppliers and receivers of commodities. Even fertilizer PSO-SOC is merely not a private company, it has responsibility to improve the efficiency of its distribution system in order to reduce government subsidy. The purpose of this research is to evaluate efficiency of existing subsidized fertilizer distribution system which is implemented by PSO-SOC, PT.X who is obliged to produce and distribute subsidized fertilizer
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