Dynamic Simulation Model of Crude Palm Oil Supply Chain to Determine Fulfillment Ratio and Manufacturing Efficiency of Cooking Oil Industry

Suryani, Erma and Hendrawan, Rully Agus and Muhandhis, Isnaini and Dewi, Lily Puspa (2018) Dynamic Simulation Model of Crude Palm Oil Supply Chain to Determine Fulfillment Ratio and Manufacturing Efficiency of Cooking Oil Industry. [UNSPECIFIED]

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Abstract

Palm oil is one of national commodities that contribute significantly to national economy. Demand for palm oil will increase with the increase of population, so that, demand for palm oil as a raw material of cooking oil will also increase. So far indonesia is more likely to export Crude Palm Oil (CPO) to various countries. From 100 downstream products of palm oil industry, only about 23 kinds of downstream products that have been produced commercially in Indonesia. Indonesia is also facing low productivity of Fresh Fruit Bunches (FFB). Indonesian palm oil productivity is lower compared to Malaysia. Based on the data indonesia has an average productivity of oil palm FFB of around 14-16 tons/ha/year while Malaysia has the FFB productivity of 18-21 tons/ha/year. Some problems faced in the palm oil industry include the following: the low productivity of fresh fruit bunches, the limited industrial downstream, policies that are not conducive and the lack of palm oil fruit processing plant. Therefore, in this study we develop a system dynamics model to improve land productivity owned by smallholder (farmer) and determine the efficiency of cooking oil supply chain as one of the downstream processed products. Improving productivity can be done through a balanced fertilizer, the use of quality seeds on replanting. The efficiency of cooking oil supply chain depends on total production cost and total revenue. As the method used in model development we utilized system dynamics simulation based on consideration that System Dynamics (SD) has been widely used in industry, macro-economic planning, social development, environment and other fields. This method emphasizes on integrity and nonlinear properties of complex systems that very suitable to model crude palm oil supply chain. Research results show that land expansion and replanting will influence the increasing rate of palm oil land area. Total land area is a summation of immature land area, yield land area and land with crop age over 25 years. The productivity of palm oil land is influenced by the adequacy of fertilizer, humidity, precipitation, temperature and sun lighting. Meanwhile, the production of fresh fruit bunches depends on land area and land productivity. Fulfillment ratio of cooking oil is greater than 100% which means that we can fulfill our national demand.

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