Production Planning Strategy to Increase the Profit at PT Pupuk Kalimantan Timur

Abstract

Abstract. PT Pupuk Kaltim is a PT Pupuk Indonesia (Persero) subsidiary, which produces ammonia,urea, and NPK. Excess production that was originally for the subsidized market should be diverted to the non-subsidized segment both domestic and export market which has many uncertainties such as demand fluctuations and product prices. From the supply-demand side, it was shown the oversupply condition for the ammonia and urea commodities in the next few years. This paper aims to find the right strategy formulation in dealing with these conditions to help the company continue to increase profits. The proposed business solution is the flexible production planning approach that will follow market demand and product prices to decide which products should produce more to generate maximum profit. An application system or simulator will be developed to create system automation. Two scenarios were generated, normal and abnormal condition. Normal condition refers to the initial production planning target from the shareholders without considering any disruption. Abnormal condition consists of internal plant problem and global fertilizer price fluctuations including high ammonia price, low ammonia price, high urea price, and low urea price. Alternative actions for each scenario under abnormal condition are rescheduling the annual plant maintenance, lowering the production load, and shutting down the plant by considering several existing constraints. Using a combination of a flexible production planning approach and its simulator, the company’s target is expected to be achieved. The profit is expected to increase about twelve billion per year.

Keywords: Production planning, annual profit, fertilizer price, production planning simulator