CALCULATION OF OPTIMAL RAW

MATERIAL PURCHASE COSTS

USING NORMALIZED GOAL
PROGRAMMING METHOD
MM Tambunan*, TS Sinaga, Albert
Department of Industrial Engineering, Faculty of Engineering, Universitas Sumatera Utara
Introduction
◦ Competition in the tight business requires the company to take advantage of every
opportunity to optimize every activity carried out.
◦ Minimizing the cost of purchasing raw materials can be done by using several methods,
one of them is the normalized goal programming method.
◦ Goal programming can handle relatively large numbers of decision variables, resource
constraints, and objectives. Goal programming is a branch of multi-objective
optimization; it extends linear programming to deal with multiple, normally conflicting
objectives
◦ This research was conducted to minimize the cost of purchasing raw materials by
selecting suppliers that have more than one predetermined objective criteria.
Object of The Study
◦ The object under study is the cost of purchasing raw materials at the company
◦ The research began by making direct observations on the company's purchasing
department.
◦ Activities undertaken are observing the situation that is happening in the purchasing
department. Data collection is needed to minimize purchasing costs at the department.
Data collected in the form of forecast data the number of product requests and supplier
performance data.
◦ Normalized Goal Programming (NGP) uses the Positive Ideal Solution (PIS) and Negative
Ideal Solution (NIS) variables as target function variables for the purchase of raw materials.
◦ This research was conducted by collecting the required data in the form of forecast data on
the number of product requests and supplier performance data.
◦ Data forecasts the number of product requests forecasting product demand for one year in
2017 based on the number of product requests in 2013-2016.
Calculation of Optimal Raw Material
Purchase Costs
◦ Supplier performance data includes:
the number of raw material orders, the
price of raw materials, the maximum Actual Purchase Cost
Raw
supply capacity of suppliers, the Purchase Costs Based reduction
Material
number of raw materials reject, reject Costs (Rp.) on NGP (Rp.) (Rp.)
rate, many days of delay and the level Rice Bran 57.082.200
of delay of each supplier. (Rp.) 877.215.000 820.132.800 (6.51%)
◦ Normalized Goal Programming Model Yellow 1.391.814.40 67.520.300
with supplier selection and allocation Corn (Rp.) 0 1.324.294.100 (4.85%)
order serves to get the optimal number Shrimp 35.145.600
of raw material orders. Head Flour (4.71%)
(Rp.) 745.666.800 710.520.200
◦ The optimal raw material purchasing Total 3.104.696.20 159.749.100
costs for rice bran raw materials are 0 2.854.947.100
shown in Table 1.
Conclusion
◦ Based on the use of Normalized Goal Programming, the cost of purchasing raw
materials has decreased the purchase costs for the period of January - March 2017 by
Rp. 57,082,200 for rice bran raw material, Rp. 67,520,300 for raw materials for yellow
corn, and a reduction in the cost of purchasing raw materials for shrimp head flour by
Rp. 35,146,600. With a total reduction in the cost of purchasing raw materials Rp.
159,749,100 (5.15%).
◦ Normalized Goal Programming can determine the best supplier based on supplier
performance data.
◦ The allocation of raw material purchase orders to the right supplier can reduce the
reject of raw material purchases and delay in the arrival of raw materials.
◦ The results of this study indicate that the application of Normalized Goal Programming
can allocate orders to existing supplier choices effectively.
◦ So as to reduce the cost of purchasing raw materials optimally.
Acknowledgement
◦ Thank you to the University of North Sumatra for their financial
support so that this paper can be published Authors also thanks
to the other parties who helped in this research.