Integrated Multi-Period Linear Programming for Production Mix and Raw-Material Procurement in an NPK Fertilizer Plant

Eunike Melani Waluyo, Yuliani Puji Astuti

Abstract


Raw-material prices for NPK fertilizer are volatile, yet plant-level planning studies seldom link procurement timing (when raw materials are bought and stocked) to the production mix (how much of each grade is made). This study measured the value of integrating both decisions, its split between timing and mix, and the share attainable with forecasts. A multi-period linear programming model, solved with HiGHS, optimized the monthly mix of six products and the purchases and stocks of seven raw materials at an Indonesian NPK plant in 2021–2024. The objective is product value at international prices minus raw-material purchase and holding costs. With perfect foresight, integration raised the 2024 margin by USD 9.58 million (3.73% of the USD 256.98 million baseline), 63% from timing, and the two effects were additive. With forecasts on a rolling horizon, timing recovered at most 13% of its bound, whereas monthly mix re-optimization remained the robust gain

Keywords


Duality; Linear Programming; Perfect Foresight; Procurement Timing; Rolling Horizon.

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References


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DOI: http://dx.doi.org/10.30829/zero.v10i2.32147

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