Raw Material Distribution

The distribution process of raw material is one of important factor in

determining factory location. In this sub chapter we also will explain every single
thing related to raw material distribution, such as how the raw material is
transported to the factory, how long it takes to transport raw material from raw
material suppliers, and how many raw material can be transported within that
time. The distribution of raw material is important thing to do to keep the raw
material flow going smoothly. If the raw material flow going smoothly, the
product flow to consumers will also going smoothly.
Raw Material Order Capacity
Raw materials of Naturathick are distributed by supplier to our factory in
Cikarang, Jawa Barat. The distribution of the raw materials up to factory
warehouse is assumed becoming the responsibility of supplier and it is included at
the signed contract. We need to determine how much the raw materials that should
be ordered, the order time, and when will the raw materials arrived at the factory
After that, we also need to calculate storage life of the raw materials so that the
ordered raw materials are not over storage capacity or accumulated in the storage
room..
Order capacity is based on how long supplier can fulfill the order of raw material
(which is from ordering phase up to distribution phase), how much raw materials
capacity that can fulfill whole production process, endurance of raw materials, and
especially how much the minimum amount of ordered raw materials. Amount or
capacity of first order is not suitable with needed capacity, it should be over-size
to anticipate problems that occurring during distribution of raw materials, so the
production process can be working. The next order is matched with the needed
capacity of raw materials so that the amount of storing raw materials is not over
the capacity of storage. Order capacity is based on how long a supplier can meet
the order of a raw material, from order to goods ordered up to the factory
warehouse, do the order capacity is booked to meet the production process, the
resistance of a raw material, and especially how the minimum number of ordering

there. The number or capacity of the first order is not in accordance with the
required capacity, but exaggerated to anticipate any problems in the delivery of
raw materials or finished stock supplier, so if there are production problems
continue to run. The next order adapted to the capacity need to keep the number of
items stored that do not exceed the storage capacity
Order capacity is determined using a method that will obtain the most economical
frequency. The method used is the Economic Order Quantity (EOQ). The purpose
of EOQ method is to determine when and how much is the inventory must be
ordered at certain time to minimizes the cost of the annual inventory.In other word
EOQ determine the optimum number of orders at any given time is determined by
balancing two factors:
a. Ownership costs (storage) of raw materials
Usually expressed as a percentage of average investment in inventory, because
most common variable is the interest cost and the cost of capital.
b. Ordering Cost
Fixed cost of raw materials ordering is irrelevant, because only the variable costs
or cash costs should be included in the purchase. The booking fee includes the
cost of making proof of purchase requests, purchase orders, receiving reports,
handle shipments, communication with suppliers, accounting and payment upon
delivery and other charges due to insufficient supplies including loss of
opportunity for savings in the purchase and utilization of duty discounts on
purchases.
EOQ=

2 x Amount of Raw Material Needed on aYear x Order Cost Per Unit

Raw Material Cost per Unit x C ost Deviation Percentage

Ordering schedule is the time of ordering raw materials to suppliers while

receiving a schedule time of receipt of raw materials that have been ordered
(entered the warehouse factory). Raw materials are ordered in accordance with the

specified capacity reservations. Delivery time is mostly plotted no later than 3

week after raw materials are booked and the booking is made within the period of
a month based on distance from the supplier to factory
Acetone, Xanthan Gum Powder, and Boric Acid is produced in Indonesia and
manufractured near the factory therefore the only cost that matter is delivery cost
and it will be transported using trucks or pick-ups based on the avaibility. Guar
Seeds will be imported from India because there is supplier in Indonesia that
produces Guar Seeds. It will be transported using ships from Mumbai to Tanjung
Priok Port, Jakarta and delivered to factory using trucks due its large amount. Its
estimated to delivered on 1-2 week subject the shipping.For Methyl Parahydroxy
Benzoate and Propyl Parahydroxy Benzoate will be imported from China because
Indonesia doesnt produce them. It will be delivered from China to Tanjong Priok
Port, Jakarta and delivered to Factory on 5-7 days. Water is the only raw material
that delivered everyday because its available everyday using pipe installation by
local water supply company. Thats is why in EOQ calculation water is not
included.

Table _._EOQ and Order Capacity for Each Raw Materials

(Source: Authors Personal Data)
Fee
d
sto
ck
per
mo
nth
(kg
)
835
569
6

Fee
d
sto
ck
per
we
ek
(kg
)
208
892
4

6121
99.6

427
11.6

106
77.9

1241
46.2

866
1.36

216
5.34

5969
0.88

416
4.48

104
1.12

1197
63.6

835
5.6

208
8.9

505.
68

35.2
8

8.82

Raw
Mate
rial

Fee
d
sto
ck
per
day
(kg
)

Fee
d
sto
ck
per
yea
r
(kg)

Water

34
81
54

1.2E
+08

Guar
Seeds
Xanth
an
Gum
Powde
r

1,77
9.65

Boric
Acid

173.
52

Aceto
ne
Methy
l
Parahy
droxy
Benzo
ate
Propyl
Parahy
droxy
Benzo
ate

348.
15

360.
89

1.47
68.8
0.2

4.8

B
as
e
(k
g)

1,
00
0

Pric
e
per
kg

Total
price
per
base

Rp14
.50

Rp831.3
9

IDR
7,77
0.00

Rp7,770,
000

10
0

IDR
38,8
50.0
0
IDR
6,47
5.00
IDR
13,5
58.6
5

50

IDR
62,1
60.0
0

25

IDR
82,8
80.0
0

10
00
10
0

1.2

Rp38,85
0,000.00
Rp647,5
00
Rp1,355,
865.00

Total
delive
ry
cost
per
base

Or
d
er
ti
m
e
(d
ay
)

EOQ

EOQ
(Appro
achme
nt)

Tot
al
ord
er
per
da
y
(kg
)

Saf
ety
sto
ck
(kg
)

Safety
stock
(Appro
achme
nt)

700,00
0.00

Rp3,108,
000

Total
order
per
year
(time
s)

Total
order
per
year
(times)
(Appro
achme
nt)

10

11227
8.3451

112279

177
96.5

266
9.48

2670

114
949

204
66.5

5.4524
85327

13377.
19776

13378

721.
78

108.
267

109

134
87

830.
78

9.2798
74421

10

7185.0
22259

7186

347.
04

52.0
56

53

723
9

400.
04

8.3065
51628

7033.1
22948

7034

696.
3

104.
445

105

713
9

801.
3

17.026
38612

18

220.93
16881

221

7.35

1.10
25

223

9.35

2.2881
44796

49.903
38155

50

0.15

51

1.376

7,000,0
00.00
700,00
0.00

Re
ord
er
poi
nt
(kg
)

1.2
E+0
8

0
20,000,
000.00

Ord
er
siz
e
(kg
)

750,00
0.00
Rp2,072,
000

375,00
0.00

Packaging Raw Materials

Packaging of Naturathick is divided into bulk size and non-bulk size. The material
for bulk packaging is using steel drum with dimension length 1.2 m and diameter
0.79 m and could contain 200 kg of thickener. For the non bulk, its using
alumunium can with dimension length 10 cm and diameter 5.58 cm and could
contain 500 g of thickener.Based on production rates which is 900 kg per day, we
will divide 800 kg for bulk and 100 kg for non bulk. Each day, we will need 4
pieces of bulk packaging and 200 pieces of non bulk packaging. For the non bulk
packaging it will be packed in cardboard box which can contains up to 40 cans.

Raw materials such as steel drums is ordered from PT Rheem Indonesia, the
alumunium can ordered from PT United Can and cardboard is ordered from CV
Jordan Packing. The drums and cans received already printed the logo and writing
on the packaging of products Naturathciks. The process will be carried out in the
factory packaging using packaging machinery. Raw materials ordered one bottle
in 2 weeks because of the location close to suppliers and takes pretty much every
day. This is done to minimize the possibility of delays or problems when sending
larger so should be given a greater period of time between ordering and receipt of
goods.
Raw Material Scheduling
In this scheduling there are two steps, first is order the materials, and second is the
time materials are received. We order raw materials based on EOQ that calculated
on table_._ . The material will received on different circumstances. Example, guar
seeds is import from India with shipping day between 7-10 day but in for safety
,regulation aspect and logistic from Tanjong Priok to Cikarang, we expected to
receive guar seeds 1-2 week after order. But for material that produces in
Indonesia, Aceton, Boric Acid, Xanthan Gum Powder, because the supplier is
located near the factory, it will delivered on 2-3 days after order but we extend for
a week or more to anticipate unexpected events. Methyl Parahydroxy Benzoate
and Propyl Parahydroxy benzoate, which is imported from China, will delivered

by ships on 5-7 day after order, but it will delivered on factory a week after order
because the safety,regulation aspect and logistic from Tanjong Priok to Cikarang.
To determine the scheduling we analyze when we order the raw materials by
calculate our remaining feed stock with formula:
Remaining Feed Stock : Prev ious Feed Stocks Amount of Raw Materials Needed Per Day

If the remaining feed stock is lower than amount of raw materials needed per day,
we order the raw material before based on its order time. The curve is made
based on data on the Appendix _ and for the timeline, its shown on figure _._
bellow.

Guar Seeds Scheduling

140000
120000
100000
80000
Kilogram

60000
40000
20000
0
0

50

100

150

200

250

Days

Figure _._

Guar Seeds Scheduling Curve

(Source: Authors Personal Data)

300

350

Xanthan Gum Scheduling

15000
10000
Kilogram

5000

0
0

50

100

150

200

250

300

350

Days

Figure _._

Xanthan Gum Scheduling Curve

(Source: Authors Personal Data)

Acetone Scheduling
8000
6000
Kilogram 4000
2000
0
0

50

100

150

200

250

Days

Figure _._

Acetone Scheduling Curve

(Source: Authors Personal Data)

300

350

Boric Acid Scheduling

8000
6000
Kilogram

4000
2000
0
0

50

100

150

200

250

300

350

Days

Figure _._

Boric Acid Scheduling Curve

(Source: Authors Personal Data)

Methyl Parahydroxy Benzoate

300
250
200
Kilogram

150
100
50
0
0

50

100

150

200

250

300

350

Days

Figure _._

Methyl Parahydroxy Benzoate Scheduling Curve

(Source: Authors Personal Data)

Propyl Parahydroxy Benzoate

60
50
40
Kilogram

30
20
10
0
0

50

100

150

200

250

300

Days

Figure _._

Propyl Parahydroxy Scheduling Curve

(Source: Authors Personal Data)

350

Figure _._ Raw Materials Schedule Timeline

(Source: Author Personal Source)