The Establishment of Decision Making Support Tool for Inventory Control and Production Planning with Periodic Review System and Linear Programming Approach

Abstract

PT. Mortars is an instant cement producer with many product variants. Some problems that PT. Mortars encountered are uncertainty of demand, limitation on production capacity, and inventory capacity, which caused product shortages and high inventory costs. The production scheduling process is produced manually so it requires a long time, relying on the ability and experience of the production planner which is vulnerable to mistakes. Therefore, new methods and tools are needed for inventory control and production scheduling to make sure goods are delivered to customer just in time while maintaining operational efficiency. Periodic review system (R,S) and (R, s, S) methods are proposed in this study to improve inventory parameters and reorder systems that have an impact on service levels and inventory costs. The tools are designed using Microsoft Excel software with solver add-ins functions and linear programming approaches to generate optimal production schedule decisions automatically. In order to determine the level of service and inventory costs generated by each method, a simulation is conducted by using the tools that have been made. The simulation of the existing method produces a service level of 98,64% and a total inventory cost of Rp. 1.167.160.494. The periodic review system (R, S) method resulted in increasing service level of 0,96% and lower inventory cost of Rp. 15.130.801 while the periodic review system (R, s, S) method resulted in increasing service level of 1,29% and a lower inventory cost of Rp. 448.653 compared to the existing method. The periodic review system (R, S) method produces the lowest inventory costs while the method (R, s, S) produces the highest service level compared to other methods.