Improvement of salt raw material procurement and inventory planning at Bitung

The aim of this study is to integrate demand forecast, determine the quantity of raw material requirements, and select the best supplier for the salt production process accurately. The steps start from demand forecasting, continue with supplier selection based on some criteria, and comparison between percentage of inventory costs and percentage of total costs in existing and proposed methods. After changing the period, the smallest error was achieved from moving average with 5 periods. The forecasting result was converted to raw materials in one period. Using Analytical Hierarchy Process, some supplier criteria like price, quality, service and delivery will give the total priority value of supplier A 0,356, supplier B 0,170, supplier C 0,249, supplier D 0,133, and supplier E 0,092. Supplier A became a selected supplier. The proposed method could decrease the percentage of stock out costs from 79,49% to 30,95%, but the percentage of saving cost increase from 20,35% to 68,62%. In total, the proposed method will save Rp2.587.609 or 28,61% from the existing method for six months.