Calculation of optimal raw material purchase costs using normalized goal programming method

Abstract

Supplier selection is a very important activity to build an effective supply chain. The purchasing department is the department responsible for determining the number of raw material purchases from several suppliers. The purchase of optimal raw materials is done using normalized goal programming. Supplier selection criteria serve as targets to minimize the cost of purchasing raw materials, minimize reject of raw materials, and minimize delays in raw materials. From the results of the study obtained an optimal allocation of raw material orders and calculated the optimal cost of purchasing raw materials. Finally, order allocation by selecting the right supplier can reduce purchasing costs by 6.51% rice bran raw material, 4.85% yellow corn raw material, and 4.71% shrimp head flour raw material.