Production Planning, Inventory and Capacity in PT. WDY and ERP Simulation Open Source

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Production Planning, Inventory and Capacity in PT. WDY and ERP Simulation
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Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

Production Planning, Inventory and Capacity in


PT. WDY and ERP Simulation Open Source
Bratayuda Raya, Lina Gozali, Carla Olyvia Doaly
Industrial Engineering Department
Universitas Tarumanagara
Jakarta, Indonesia
bratayuda.545180095@stu.untar.ac.id, linag@ft.untar.ac.id, carlaol@ft.untar.ac.id

Abstract

Production planning is an important activity in the company, production planning at PT. WDY
experienced several problems, namely the company tended to use intuition or experience in
determining lot sizes and sometimes ordered only as needed. This has resulted in several problems
such as increased costs, shortage of raw materials, etc. Therefore, it is necessary to improve the lot
determination process. The improvement process starts with forecasting, where the forecasting
method chosen based on the smallest error rate of 19.46% is the winter method. Then proceed with
the manufacture of MPS, checking capacity using the gross capacity method, calculating the number
of lots and calculating the capacity of each machine. The results of the calculation of factory capacity
show that the factory capacity is larger so that MPS can be implemented. The method of calculating
the number of lots selected is the Wagner within the method with a cost reduction of 14.24%. In the
calculation of machine capacity, it is found that each machine has a capacity greater than what is
needed, which means that each machine can meet consumer demand

Keyword
Production Planning, Forecasting, Capacity Planning, MPS

1. Introduction
PT. WDY is a manufacturing company engaged in printing, this company produces snack food
packaging. The main product produced is in the form of box-shaped snack packaging. not only snack
packaging but also various other product packaging, such as instant noodle packaging, canned
drinks, and mosquito coil packaging. PT. WDY produces tens of thousands of packages in one day
from various orders, seeing many orders, the production process carried out by the company
requires sophisticated and modern machines and tools (Manahan, 2012). The method of planning
and quality control must also be precise, so that it can fulfill a high customer order

Based on information from discussions with the production staff of PT. WDY is known that the
company in determining the lot size of raw materials has not used the right method. Generally,
companies use intuition or experience and order according to consumer demand.

The absence of the right and optimal method and ordering only based on consumer demand, causes
companies to have to order raw materials repeatedly (Kusuma, 2009). Of course, this will cause
ordering costs to rise. In addition, the company also often experiences delays in receiving raw
materials and shortages of raw materials so that the production process is disrupted. The company
also informed that the procurement of raw materials also accounts for 65% of the company's total
costs.

Therefore, the company needs a proposed improvement design for the new lot sizing method
which is expected to help the company overcome the problems that occur. Thus, the purpose of
this study is to determine the right lot sizing method for each material that will be used to make the
product,

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

make the right material requirements planning to reduce delays and determine the right lotting size
for each material to meet consumer demand, determine the schedule ordering the right raw materials
so that they can be implemented properly.

2. Literature Review
To be able to do research at PT. WDY requires some good knowledge so that it can analyze existing
problems and find solutions to the problems.

2.1 Production Planning and Control


Production is the main activity carried out by every company; this activity includes activities that
are responsible for creating value-added products which are the output of each industrial
organization (Fahmi, 2016).

2.2 Safety Stock


Safety stock is a number of necessary goods provided by the company which serves to prevent a
shortage of goods when consumer demand conditions are uncertain. To be able to provide these
inventory items, a certain period is needed before the goods can arrive (Lieberty, 2015).

Safety stock or safety stock has a very important role in supply chain management. This system is
designed to be able to achieve maximum profit, anticipate changes in market demand and make it
easier to schedule the production of goods (Christifan et.al., 2020).

2.3 Forecasting
Forecasting is the science of predicting future events. Forecasting is done by involving taking
historical data (previous data) and projecting that data into the future with mathematical models
(Agung, 2009).

This demand forecasting activity is an attempt by the company to find out the amount of a product
or group of products in the future under certain constraints or conditions and to minimize the risks
or uncertainties that will be faced (Lefta et.al., 2020).

2.4 Master Production Schedule


The Master Production Schedule or commonly referred to as the master production schedule is a
short-term production planning activity in a company that contains a comprehensive plan and details
for producing the final product (Hasan, 2011). In the master production schedule, there is some
important information that contains the priority of the product model to be produced, the schedule
for purchasing production materials, the schedule for the implementation of the production process
and employee work schedules as well as the machine operating schedule (Heizer, 2006). This master
production schedule also has benefits in planning production capacity and material requirements for
production activities (Putri and Gozali, 2020).

2.5 Rough Cut Capacity Planning


Rough cut capacity planning is an activity in the form of a capacity analysis process from a
production facility in a factory to ensure that the production facility can support the master
production schedule that has been prepared (Sinulingga, 2009).

2.6 Lot Sizing


Lotting or lot-sizing is the process of calculating how large the optimal order of a material is based
on the net needs of the calculation results. The lotting process is closely related to determining the
amount of material that must be ordered or provided to make the production process run well and
smoothly (Handoko, 2011). The lotting process itself is very important in planning material
requirements, so the use and selection of the right method will affect the effectiveness of the material
requirements plan.

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

2.7 Material Requirement Planning


MRP is a material management system created to increase business productivity in managing
materials. Usually, MRP is applied to identify the amount of raw material needed to be used in
producing an item (Sitompul, 2011)

2.8 Capacity Requirement Planning


capacity requirements planning is the stage to compare the required capacity with the available
capacity on the actual production floor to ensure that demand can be met (Indrajit, 2003)

3. Methods
In the process of collecting data, researchers used observation and interview methods and collected
data through permitted company documents. In conducting this research, the writer uses various
methods in performing calculations and then the results of these calculations are compared with one
another. After making a comparison, then an analysis is carried out to choose which method is the
best that will be suggested to the company.

The method used in the forecast calculation is the single moving average, double moving average,
single exponential smoothing, double exponential smoothing, weighted moving average, quadratic,
decomposition and winter methods.The method used in the calculation of capacity is the method of
capacity planning using the overall factor, bill of labour and resources profile approach.

The method used in determining the number of lots is the fixed lot method, planned order quantity,
lots for lots, economic order quantity, Silver Meal, Wagner Within, Least Total Cost, Least Unit
Cost, and Part Period Balancing. The method used in calculating the required engine capacity and
available engine capacity is the capacity requirement planning method. The ERP simulation carried
out is using an open-source ERP, namely Odoo. The following is a flow chart of the research method
which can be seen in Figure 1 below.

Figure 1. Methods Flow Chart

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

4. Data Collection and Processing


In this study, a product called Box P25 Siip Keju will be used, the first step that must be done is to
forecast demand for the next period, this is intended to estimate how much consumer demand will
be in the coming period. Thus, we can find out whether the products we make have decreased or
increased.

4.1 Forecasting
In forecasting we will use demand data from the previous period, namely data for the past twelve
months. Then, forecasting will be carried out to predict product demand using Minitab software
(Santoso, 2009). The following is the result of demand forecasting for the next twelve months which
can be seen in Table 1 below.

Table 1. Forecasting Results

Methods MAD MSE MAPE


SMA 2 385350.00 295734100000.00 49.49%
SMA 3 340296.30 272302500000.00 38.55%
SMA 4 435562.50 337006300000.00 45.81%
SMA 6 443944.50 382765800000.00 37.41%
DMA 3 510492.06 473376552028.22 69.50%
WMA 3 409456.80 293792000000.00 50.87%
WMA 4 436152.80 327788400000.00 50.77%
WMA 6 440685.20 322750200000.00 44.95%
WMA 2 399337.50 289588600000.00 52.77%
SES 0,2 350441.36 285126873025.78 35.61%
SES 0,3 340766.1 249639900000.00 37.98%
SES 0,6 354141.3 240402100000.00 46.91%
SES 0,8 379126.5 264008100000.00 53.27%
DES 0,2 0,5 313742.00 197235000000.00 63.82%
DES 0,3 0,6 343612.00 232154000000.00 65.60%
DES 0,6 0,3 3.30E+05 250567000000.00 64.08%
Least Square 280920.4 132682900000.00 64.70%
Quadratic 275789 120705000000.00 75.74%
Decomposition 274480.00 134877000000.00 63.20%
Winter 0,1 361026.00 222145000000.00 48.53%
Winter 0,9 87576.90 11225900000.00 19.46%
Winter 0,3 161702 63090400000 29.41%

The winter method with an alpha value of 0.9 produces the smallest error value. Therefore, the
authors suggest the company use the Winter Exponential Smoothing method for forecasting.

After the forecasting results are obtained, the next step is to validate the forecasting results. After
the validation of the forecasting results is obtained, then the tracking signal calculation results will
then be plotted (Gunawan et.al.,2020). The plotting results can be seen in Figure 2 below.

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

Figure 2. Tracking Signal

Based on the graph above, it can be concluded that the tracking signal value does not cross the upper
and lower control limits. So, it can be concluded that the forecasting results are within the control
limits and can be used.

4.2 Master Production Schedule


The next step is to determine the master production schedule or commonly referred to as the master
production schedule. The master production schedule is obtained from the calculated forecasting
results. The following is a master production schedule which can be seen in Table 2 below.

Table 2. Master Production Schedule

Month Demand (Pieces)


May 2022 204,758
Jun 2022 174,491
Jul 2022 253,132
Aug 2022 228,450
Sept 2022 316,205
Oct 2022 1,636,761
Nov 2022 2,788,945
Dec 2022 783,750
Jan 2023 1,880,620
Feb 2023 2,206,298
Mar 2023 1,319,019
Apr 2023 2,121,194

After the master production schedule has been created, the next step is to validate the master
production schedule that has been made using rough capacity planning or commonly called rough-
cut capacity planning.

4.3 Rough Cut Capacity Planning


Rough cut capacity planning is capacity planning that aims to find out how big the factory’s capacity
is to produce a product (Wijaya et.al.,2020). The results of the RCCP calculation can be seen in
Table 3 below.

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

Table 3. Comparison of Available Time and Time Required

May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr
Machine
2022 2022 2022 2022 2022 2022 2022 2022 2023 2023 2023 2023
Cutting V V V V V V V V V V V V
Printing V V V V V V V V V V V V
Coating
Water V V V V V V V V V V V V
Base
Ponding
V V V V V V V V V V V V
Matic
Gluing
V V V V V V V V V V V V
Machine

After the comparison is made, it can be seen that the demand on the master production schedule can
be met by the factory capacity which is marked with a check mark (V).

4.4 Material Requirement Planning


In material requirements planning, it is necessary to convert from the master production schedule
into material requirements planning. The following is an example of calculating changes from the
master production schedule to material requirements planning on the Liquid Ink DM-08 Yellow
material which can be seen in Table 4 below.

Table 4. Exploding MPS Liquid Ink DM-08 Yellow

Month Demand (Pieces) Needs/Pieces Results (Kg)


May 2022 204,758 19
Jun 2022 174,491 16
Jul 2022 253,132 24
Aug 2022 228,450 21
Sept 2022 316,205 30
Oct 2022 1,636,761 154
0.000094 Kg
Nov 2022 2,788,945 262
Dec 2022 783,750 74
Jan 2023 1,880,620 177
Feb 2023 2,206,298 207
Mar 2023 1,319,019 124
Apr 2023 2,121,194 199

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

4.5 Lot Sizing


Lot sizing aims to determine the amount of material to be ordered so that the combination with the
lowest cost is obtained. The comparison of the lot method can be seen in Table 5 and Table 6 below.

Table 5. Cost Comparison of Each Method

Metho
Material
ds
LFL Fixed LUC LTC E
O
Q
Duplex Board
310 GR 610 X Rp21,227,717 Rp22,531,177 Rp19,657,043 Rp16,773,873 Rp17,726,741
650 mm
Liquid Ink
Rp2,543,984 Rp2,112,193 Rp2,223,700 Rp2,132,217 Rp2,295,343
DM-01 Cyan
Liquid Ink
DM-04 Rp1,872,000 Rp2,012,039 Rp1,596,609 Rp1,523,759 Rp2,430,297
Magenta
Liquid Ink Rp2,004,000 Rp2,083,665 Rp2,022,865 Rp1,825,965 Rp2,992,166
DM-08 Yellow
Liquid Ink
DM-06 Pr- Rp1,320,000 Rp1,463,815 Rp1,224,517 Rp1,081,553 Rp2,787,823
Black
DOOS
Rp20,880,000 Rp21,384,702 Rp17,278,170 Rp12,252,855 Rp21,566,611
Packing
Fluid WB
Rp2,232,000 Rp2,607,724 Rp4,129,255 Rp2,815,727 Rp3,350,710
Coating
Lem Perekat Rp1,776,000 Rp1,968,642 Rp2,033,495 Rp2,097,735 Rp2,434,921

Table 6. Cost Comparison of Each Method

Methods
Material
PPB POQ Silver Meal Wagner
Duplex Board 310 GR 610
Rp12,874,580 Rp13,138,578 Rp12,874,914 Rp11,890,806
X 650 mm
Liquid Ink DM-01 Cyan Rp1,813,141 Rp1,857,659 Rp1,930,076 Rp1,522,307
Liquid Ink DM-04 Rp1,539,481 Rp1,605,328 Rp1,620,161 Rp1,379,074
Magenta
Liquid Ink DM-08 Yellow Rp3,262,479 Rp2,548,034 Rp1,754,206 Rp1,718,543
Liquid Ink DM-06 Pr-
Rp1,145,371 Rp1,218,090 Rp1,229,884 Rp1,019,217
Black
DOOS Packing Rp16,284,875 Rp17,383,237 Rp17,561,380 Rp13,871,928
Fluid WB Coating Rp2,343,749 Rp2,553,340 Rp3,072,435 Rp1,659,923
Lem Perekat Rp2,044,383 Rp2,014,274 Rp2,102,524 Rp1,464,462

After looking at the comparison of the costs of each method for each material, the Wagner Withi
method produces the lowest cost compared to all other methods of determining the

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

size of the number of raw materials ordered. Thus, the authors suggest the factory to use the
Wagner within the method in determining the number of raw materials to be ordered.

4.6 Capacity Requirement Planning


Capacity Requirement Planning is a capacity calculation to find out whether each machine on the
production floor is able to meet consumer demand (Gozali et. al., 2020). The results of the CRP
calculation can be seen in Figure 3 to Figure 7 below.

Figure 3. CRP Cutting Machine Figure 4. CRP Printing Machine

Figure 5. CRP Coating Machine Figure 6. CRP Ponding Machine

Figure 7. CRP Gluing Machine

Based on the diagram of each machine above, it can be seen that each machine in the factory does
not exceed the total available time owned by the factory, thus each machine can meet consumer
demand.

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

4.7 Enterprise Resources Planning


Enterprise resource planning is a set of modules that are combined into an information system that
can automatically connect or integrate business processes within the company (Rangkuti, 2007).
Odoo is an open-source ERP information system that consists of various modules to integrate
business processes within a company. Some of the modules available are sales, manufacturing,
human resources, projects, inventory, and accounting. This is an example of implementing odoo
ERP which can be seen in Figures 8 to 11 below.

Figure 8. Sales Module

Figure 9. Purchasing Module

Figure 10. Inventory Module

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

Figure 11. Manufacturing Module

The implementation of ERP certainly makes the processes within the company easier and more
effective and of course faster. The following is a comparison after ERP implementation which can
be seen in Table 7 below.

Table 7. Comparison After ERP Implementation

Before Implementation After Implementation


Updating of information regarding the entry Information updates regarding the entry and
and exit of goods from the warehouse is done exit of goods from the warehouse are carried
manually by the operator out automatically by the system

The process of calculating whether raw The process of calculating whether or not
materials are sufficient or not in the raw materials are sufficient in the production
production process is carried out manually process is carried out automatically by the
by the operator system
The making of asales, purchases and The making of sales, purchases, and
production invoice are done manually by production invoice are done automatically
operators with different by the system and can
applications be sent directly to consumers

The Dissemination of information for each The Dissemination of information to every


department in the company is still limited department in the company is very open
because to get information, you must contact because to get information, you only need to
the log into the system
relevant department

Coordination between each division within Coordination between divisions becomes


the company is still slow due to limited faster because each division shares
information information with the other

5. Results and Discussion


Based on the data collection and processing that has been done above, it can be seen that a good
method based on the calculation of the smallest error value is the winter method with an alpha value
of 0.9. In addition, no forecast validation calculation that crosses the upper and lower limits.
Therefore, the authors suggest using this method.

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

In the calculation of factory capacity, it is found that consumer demand is still below the factory
capacity so that consumer demand can be fulfilled, and the master production schedule can be
implemented.

In the comparison of lot determination methods, it was found that the method with the lowest cost
was the Wagner within the method with a cost reduction percentage of 14.24%.

In the calculation of the capacity of each machine, it can be seen that the production needs for each
machine do not exceed the amount of available time owned by the factory, thus each machine is able
to meet consumer needs.

The application of enterprise resource planning can help improve company performance in planning
and controlling production. Some of the benefits obtained include information on the availability of
raw materials which is always updated automatically, a fast calculation process, open information
sharing between departments, and increased coordination and cooperation between divisions.

6. Conclusion
Based on the research that has been done, several conclusions can be drawn. The following are some
conclusions that can be drawn.

a. Forecasting is an important first step in production planning. The right forecast in this study
based on the smallest error is forecasting with the winter method with alpha 0.9 which has
an error rate of 19.48% MAPE, 87576.90 MAD, and 11225900000.00 MSE.
b. The comparison of factory capacity and required capacity using the RCCP method states that
the total required capacity of 446.58 hours can be fulfilled by the factory of 131152 hours.
c. The method of determining the right number of lots used by the factory is the Wagner Within
method with a cost reduction percentage of 47.5%, a percentage decrease in ordering
frequency by 10%, and a decrease in the amount of inventory by 75.8%.
d. The calculation of the capacity of each machine using the CRP method shows that the time
it takes for each machine to produce consumer demand can be met. The need for 4546 hours
on the cutting machine can be met with a capacity of 16960 hours, the need for 5891 hours
on the printing machine can be met with a capacity of 57701 hours, the need for 10340 hours
on the coating machine can be met with a capacity of 19843 hours, the need for 7432 hours
on the ponding machine can be met with a capacity of 25446 hours and the need for 2136
hours on the glue machine can be met with a capacity of 11200 hours.
e. The implementation of an ERP system in planning and controlling production will make the
company become and. ERP systems can help companies integrate all operational processes
quickly and automatically

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Biographies
Bratayuda Raya is a final year student at Tarumanagara University majoring in industrial
engineering. He is active in campus organizations. He once become a leader in one of the campus
organizations from 2020 to 2021. He also ever joins the student creativity program about product
designing to get a scholarship from Tarumanagara University.

Lina Gozali is a lecturer in the Industrial Engineering Department at Universitas Tarumangara since
2006 and a free-lance lecturer at Universitas Trisakti since 1995. She got her bachelor’s degree at
Trisakti University, Jakarta - Indonesia, then she graduated master’s degree at STIE IBII, Jakarta –
Indonesia, and graduated with her Ph.D. at Universiti Teknologi Malaysia, Kuala Lumpur –
Malaysia in 2018. Her apprentice college experience was in paper at Kertas Bekasi Teguh, shoe at
PT Jaya Harapan Barutama, automotive chain drive industry at Federal Superior Chain
Manufacturing. She teaches Production System and Supply Chain Management Subjects and her
Ph.D. research about Indonesian Business Incubator. She actively writes for almost 40 publications
since 2008 in the Industrial Engineering research sector, such as Production Scheduling, Plant
LayOut, Maintenance, Line Balancing, Supply Chain Management, Production Planning, and
Inventory Control. She had been worked at PT. Astra Otoparts Tbk as International.

Carla Olyvia Doaly is a lecturer in the Industrial Engineering Department at Universitas


Tarumanagara graduated with my bachelor's degree from Institut Teknologi Nasional Malang,
which study the Industrial Engineering program, then continued my master’s degree at Institut
Teknologi Bandung majoring in Industrial engineering and management and a special field of

© IEOM Society International


Proceedings of the 3rd Asia Pacific International Conference on Industrial Engineering and
Operations Management, Johor Bahru, Malaysia, September 13-15, 2022

Enterprise Engineering. I am very interested in studying industrial engineering by doing research


related to System Design and Engineering, Supply Chain Management, Operations Research and
Analysis, Information System Management, Occupational Health and Safety, Facilities Engineering,
Quality and Reliability Engineering

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