The optimisation of fresh apple inventory by using a multi-supplier Basnet-Leung model (Case study in X Supermarket, Indonesia)

Abstract

Apple, as one of the fresh fruit commodities, needs specific treatment in material handling to keep the freshness of the product from farm to the consumers. One of the critical process to maintain the quality of the product is the inventory system. Inventory is one of the significant cost components in the production system. Therefore, the inventory system must be controlled to propose the optimal inventory level at the minimum cost. The objective of this paper is to minimise the inventory costs of fresh apple inventory in one of supermarket in Indonesia by using a multi-supplier Basnet-Leung formulation model since the retailer replenishes his inventory from several suppliers. This model allows the system to apply multi-products, multi-periods lot sizing and multi-suppliers. The result shows by comparing the costs components between the existing company inventory system and the proposed Basnet-Leung inventory system; the total cost is reduced up to 40.26%. It results in the total saving in purchasing cost, ordering cost, and holding cost up to 43.20%, 1.17%, and 44.31% respectively. To sum up, controlling the inventory level by using Basnet-Leung model will result in a more effective way of purchasing management.