Development of a Raw Material Inventory Model Taking Expiration Time and Unit Discount Factors into account in a business unit can be categorized as working capital in the form of goods. Its existence, on the one hand, is considered a waste, but on the other hand, it is also considered an indispensable asset to ensure the smooth fulfillment of requests. Too much inventory will result in increased inventory costs due to damaged materials, especially because the material has passed its expiration date. To minimize the total cost of inventory, companies can also seek to reduce purchasing costs which can be obtained by considering discounts on purchases from suppliers when ordering in large quantities. Thus it is necessary to look for supplies that provide the most minimal costs in procuring supplies. This research was conducted with the aim of producing a raw material inventory planning model with the constraints of material expiration time constraints and the presence of discount factors, especially the all unit discount quantity, imposed by suppliers. While the basic model used is the Economic Order Quantity (EOQ) inventory model. Model validation is carried out by eliminating expiration and unit discount factors in the model. The validation states that the model developed is valid. In the final section, a simple algorithm for finding model solutions and numerical examples is presented.
In life activities, supplies are almost always needed, both in personal, household and business activities. What distinguishes these inventories is the type and quantity of goods, the characteristics of the needs of the goods and the intensity of their management. Inventory in a business unit can be categorized as working capital in the form of goods. Its existence, on the one hand, is considered waste, so that it can be regarded as a liability that must be eliminated, but on the other hand, it is also considered an asset that is very necessary to ensure smooth fulfillment of requests. If there is no supply, the demand will not be fulfilled and this will result in losses, both in the form of unacceptable profits, idle machines and equipment (tangible costs), as well as in the form of a bad image resulting in the transfer of customers to other parties ( intangible costs). Therefore the existence of inventory needs to be managed properly so that optimal performance is obtained (Bahagia, 2003). Industries that produce perishable products (experiencing deterioration or decreasing value after a certain time) are generally process industries, inseparable from inventory problems. The characteristics of the process industry in general are high production volumes with certain products and standardization. This standardization includes the standard composition of the products produced and the raw materials used. For the food processing industry, expiry time is an issue that must be considered in raw material planning. This is because it involves product safety issues at the time of consumption, bearing in mind that most of the raw materials used have a limited shelf-life (expiration) (Indrianti, 2001). Discounts are often found in sales systems, both product and service sales. There are two types of discounts that are commonly used, namely cumulative discounts (all units) and incremental discounts. The latter is intended to encourage buyers to increase their purchase amount. Discounts can be viewed from two different perspectives, namely buyers and sellers. From a buyer’s point of view, the discount offered by the seller results in the need for modifications to the inventory system, namely in determining economic order sizes (Gunawan, 1990). Basically, buyers will be more interested in making purchases if the price discounts offered are larger. Likewise, the company, of course, will consider the quantity of discounts on its economic ordering decisions. However, companies, especially for the perishable product industry, should still consider the expiry time of raw materials so that inventory levels remain optimal. Therefore, this research discusses the development of a raw material inventory planning model by considering the expiration time of materials in the food processing industry and the unit discount factor given by the supplier. The idea underlying this research is that the expiration time of materials is very influential in the production system, especially material inventory. Too much inventory will result in increased inventory costs because the material becomes damaged, because it has passed the expiration date.