Track: Production Planning and Control

Abstract

Optimizing supply chain operations by reducing costs, increasing responsiveness, and remaining competitive in a dynamic environment are important things for pharmaceutical companies. Perishable products in pharmaceutical companies make production planning problems more complex. The quality of perishable products is one of the characteristics that need to be considered because perishable products are not static parameters but are very dynamic variables. Determining the quantity of products that must be produced in order to reach consumers before the product shelf life runs out is one of the challenges in industries with perishable products. Demand fluctuates between periods during the planning horizon requires the model used to be dynamic model in order to represent the reality. Dynamic lot sizing will be used in this study which developed by taking quality deterioration into account. The decrease in the quality of perishable products in the study was affected by time, temperature, and humidity. Perishable products and backorders can be considered as complementary phenomena because when an item is highly perishable, demand may need to be accommodated to contain costs due to damage, so that losses can be avoided. This study aims to identify production, inventory, and backorder decisions during the planning horizon that will affect the cost of goods manufactured. The cost of goods manufactured is a measure of a company's competitiveness, therefore it is one of the focuses of this research. The cost of goods manufactured for the optimal quantity of production will be compared with the cost of goods manufactured under the existing conditions of the company.