DETERMINATION OF SUPPLIER AND ORDER QUANTITY OF RAW MATERIAL USING AHP METHOD AND LINEAR PROGRAMMING

Abstract

Companies must choose suppliers properly, because the selection of the right supplier can reduce raw material costs and increase the competitiveness of the company, while improper supplier selection can cause financial and operating problems. The purpose of this study is to determine the optimal supplier and order quantity of raw materials. As for the object of the research is a multipurpose technology machinery company. Data collection methods used in this study were observation, interviews, and questionnaires. Supplier data is processed using the AHP method to determine the right supplier, while the linear programming method is used to determine the order quantity of the raw material. Based on the calculation, the DS supplier gets a weight of 0.65 and the LG supplier gets a weight of 0.35. The optimal order quantity from each supplier is 7.5 tons for DS and 7.5 tons suppliers for LG suppliers. From the results of the optimization, the cost reduction figure is Rp. 3,750,000 or 3% of the total cost of purchase.