Optimization of Badak LNG Inventory Planning Management Based on Forecasted Demand

DOI

10.2991/aebmr.k.201222.049How to use a DOI?

Keywords

Badak LNG, MRO, inventory, RAV, write-off, impairment, forecasting

Abstract

In the process of producing LNG, Badak LNG performs Maintenance, Repair, and Overhaul (MRO) activities to ensure the reliability, safety, and productivity of the facilities equipment. Currently, the equipment required to produce LNG products is less in numbers due to the decreasing upstream feed gas supply. This condition has brought a massive challenge for the company to reduce the inventory value. The effort had been started since 2014 by implementing write-off and impairment strategy for the obsolete and dead stock spare parts. It has successfully decreased the value, yet the value has not reached the allowable level. According to best practice released by the Society for Maintenance and Reliability Professionals (SMRP), the allowable inventory value to support MRO activities is typically set as 1.5% of Replacement Asset Value (RAV). In the case of Badak LNG, to achieve that level, the inventory value should be reduced by USD 5.5 million. Departing from this target, the company is now attempting the reduction through the forecasting process improvement. Based on the calculations, forecasting process improvement can afford an approximately USD 4.56 million reduction, but it is only 82.90% of the target value of reduction. The remaining value should be eliminated through the implementation of write off and impairment strategy to the available obsolete and dead stock spare parts. In addition, to prevent the additional dead stock items in the future, replenishment strategy for the other spare part categories including insurance, repairable, and replacement parts should be differentiated from consumable parts.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Zora Yuliardi
PY  - 2020
DA  - 2020/12/23
TI  - Optimization of Badak LNG Inventory Planning Management Based on Forecasted Demand
BT  - Proceedings of the International Conference on Business and Management Research (ICBMR 2020)
PB  - Atlantis Press
SP  - 339
EP  - 345
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201222.049
DO  - 10.2991/aebmr.k.201222.049
ID  - Yuliardi2020
ER  -