The application of EOQ and lead time crashing cost models in material with limited life time (Case study: CN-235 Aircraft at PT Dirgantara Indonesia)

Abstract

PT. Dirgantara Indonesia, one of State Owned Enterprises engaging in the aerospace industry, targets to control 30% of world market for light and medium sized aircraft. One type of the aircrafts produced by PT. DI every year is CN-235. Currently, the cost of material procurement reaches 50% of the total cost of production. Material has a variety of characteristics, one of which is having a lifetime. The demand characteristic of the material with expiration for the CN-235 aircraft is deterministic. PT DI does not have any scientific background for its procurement of raw material policy. In addition, there are two methods of transportation used for delivering materials, i.e. by land and air. Each method has different lead time. Inventory policies used in this research are deterministic and probabilistic. Both deterministic and probabilistic single and multi-item inventory policies have order quantity, time to order, reorder point, and lead time as decision variables. The performance indicator for this research is total inventory cost. Inventory policy using the single item EOQ and considering expiration factor inventory results in a reduction in total costs up to 69.58% and multi item results in a decrease in total costs amounted to 71.16%. Inventory policy proposal using the model of a single item by considering expiration factor and lead time crashing cost results in a decrease in total costs amounted to 71.5% and multi item results in a decrease in total costs amounted to 71.62%. Subsequently, wasted expired materials, with the proposed models have been successfully decreased to 95%.