INVENTORY PLANNING FOR IMPORTED RAW MATERIAL USING PROBABILISTIC MODEL AT PT. ABC

Abstract

PT. ABC is a company engaged in coloring all thermo plastic resins, this company applied make to order system. The raw materials are imported and obtained from several suppliers, the raw material usually carried by ship because the price is cheaper. In PT. ABC current system, company has a problem in controlling the raw material inventories. This results in a shortage of raw materials, which can cause difficulties in the production process. In addition, the shortage requires raw materials to be shipped by plane, which results in a 35% price rise over shipping by ship. Shortage occurred because uncertainty demand and PT. ABC does not have a method to determine the optimum inventory level, this causes a large inventory cost. This shortage occurred also as a result of the forecasting method's inadequacy, forecasting method applied is not appropriate yet based on estimated orders from the previous period. That is why PT. ABC's current inventory method is not yet optimum. As a result, a new inventory system must be designed in PT. ABC. For forecasting, forecasting will be carried out using the Linear Regression method, and for controlling imported raw material inventories will use Continuous Review and Periodic Review. The results of the study shows that the total cost for current company’s method has decreased from IDR 14,026,574,558 to IDR 12,674,274,651 with Continuous Review method, the decreased is about IDR 1,352,277,958 or 9.64% per year and decreased from IDR 14,026,574,558 to IDR 13,037,105,250 with Periodic Review Method, the decreased is about IDR 989,469,308 or 7.05% per year.