Multi objective optimization approach for multi-item inventory control: A case study in leather industry

Abstract

PT ASA is a leather tanning company. Almost 65% of the company's assets are allocated for the procurement of raw leather, which consists of goat and sheepskin. In addition to being expensive, the availability of raw leather is also very limited. The company faces a trade-off where, on one hand, the raw material is easily decayed, but on the other hand, its availability is extremely limited, and if there is not enough inventory, the production process will be disrupted. In this research, a multi-objective optimization model is developed for controlling the inventory of raw leather using the Fuzzy Goal Programming approach. The objectives to be achieved are to minimize the total inventory cost, maximize the total quantity of raw leather that meets standards, and minimize the total cost of losses due to decayed raw leather. Based on the calculations, the fuzzy goal programming membership function value is obtained at 0.9155, with a total inventory cost over the planning horizon of IDR 10,341,630,000, a total of 1,279,542 sq ft of raw leather meeting standards, and a total loss cost due to decayed raw leather of IDR 142,911,691.

Keywords

• multi-objective optimization
• fuzzy goal programming
• inventory
• decay
• leather