An inventory system of packaging materials: Case study at PT. Djambi Waras Jujuhan

Abstract

PT Djambi Waras Jujuhan is one of Crumb Rubber Factory which is inseparable of inventory problems. It needs packaging materials for production process, especially in packaging process. Currently, PT Djambi Waras Jujuhan has the problems in controlling inventory system of packaging materials because of one supplier only supplying materials, variation of lead time, high minimum stocks of packaging materials and pile up in the storage. The aim of the research is to propose an inventory system of packaging materials to improve inventory performance considering variations of lead time. The inventory system we proposed consists of four steps. The first step is calculating Inventory Turnover (ITO) to identify how the performance level of the existing inventory system. The second step is determining aggregate planning of packaging materials, classifying packaging materials using ABC analysis and testing distribution of lead time. The third step is determining economic order quantity and order interval, safety stock and reorder point. The fourth step is calculating total annual inventory cost considering safety stock and variation of lead time. Sensitivity analysis is performed to see the effects of changes of input parameters to the decision variables and total inventory cost. Based on analysis we have done, current inventory system of packaging materials at PT Djambi Waras Jujuhan has not been efficient yet that we can see from the value of inventory turnover. From 38 types of packaging materials, 18 types of packaging materials have the value of inventory turnover more than 1 and 20 types have the value of inventory turnover less than 1. The inventory system we proposes in this paper can save 78,46% of total current inventory cost that is Rp.320.728.188,-. Therefore, the inventory system considering variation of lead time we proposed at PT Djambi Waras Jujuhan has increased the inventory performance.