ANALYSIS OF COST COMPARISON FOR INCREASING THE LINE CAPACITY THROUGH OVERTIME OR ADDING NEW LINE OF Z PRODUCT IN PT. JRV

Abstract

Fulfilled the consumer’s demand is one of the main objectives owned by all kinds of industry. It may seem easy to reach the goal, especially if the industry is already known in general by the public, but the amount of demand from the consumers is not constant in every month even in every year. However, the trend of demand in food industry increased rapidly over the period that may cause the company overrun by the demand and facing the difficulties in fulfilling the demand because of the capacity that is insufficient. This problem has been experienced by PT. JRV that engaged in the food industry of light snack. PT. JRV cannot fulfill the demand for Ritz product from the consumers. Overtime has been applied but the output still less than expected. Therefore, increasing the capacity of the machines is required by PT. JRV. Responding to the problem, adding a new line and overtime planning are proposed as alternative solutions. In solving the problem, feasibility study of technical and financial aspect is used to evaluate the alternative. From the results, it can be concluded that the chosen alternative to increasing the capacity is adding a new line with total cost is IDR 25,184,510,453 and the capacity is increased from 31,455.22 tons become 15,727.61 tons per year.