INVENTORY PLANNING FOR FORMULA AND ENTERNAL FOOD SUPPLY AT HASAN SADIKIN HOSPITAL

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1 THE INDONESIAN JOURNAL OF BUSINESS ADMINISTRATION Vol. 1, No. 9, 2012: INVENTORY PLANNING FOR FORMULA AND ENTERNAL FOOD SUPPLY AT HASAN SADIKIN HOSPITAL Muhamad Ardani and Togar M. Simatupang School of Business and Management Institut Teknologi Bandung, Indonesia Abstract Nutrition Installation is a unit in hospital that manage nutrition service effectively and efficiently with optimal quality, including procurement, management, and distribution of food, nutrition therapy and nutrition counseling, as well as education and training (Health Ministry of Republic Indonesia). In providing food services for hospital customers, Nutrition Installation experiencing an overstock and stock out problems in formula & enteral food at daily warehouses as Nutrition Installation s main warehouses. This research will discuss the improvement of inventory planning in main items of formula & enteral food at Nutrition Installation s daily warehouses. Up until now, inventory planning of formula & enteral food based solely on intuition. This has become main cause of overstock and stockout condition in formula & enteral food. Inventory management that proposed in this final project is fixed order quantity with safety stock using forecasted demand. Forecasted demand is obtained by comparing several methods of forecasting; and from these several methods, exponential smoothing is the best forecasting method because has smallest value of error compared to the other methods. Therefore exponential smoothing method is suitable method to forecast the demand from each items of formula & enteral food supply. The reasult of the research in this final project is a saving from inventory cost about 70,78% a year for Ensure, 48,56% a year for Vitaplus, 62,19% a year for Entrasol, 64,95% a year for Peptisol, 80,21% a year for Pan Enteral, 75,16% a year for Peptamen, 67,33% a year for Pediasure, and 66,14% a year for Anlene; which is 66,80% potential saving from total inventory cost of formula & enteral food supply in one year period. In order to implement inventory management based on inventory planning that appropriate with demand characteristic, there are several steps that will involve related division in Nutrition Installation. First, conducted forecasting training by using calculation technique and computerized calculation using Mocrosoft Excell program. The next step is testing the inventory planning by monitoring the demand s trend for 2 months and continue evaluation from this test begins. Keywords: Formula & Enteral Food, Overstock, Stock out, Nutrition Installation, Demand, Forecasting, Fixed Order Quantity with Safety Stock I. INTRODUCTION Hospital Nutrition Services is the activity of nutrition services at the hospital to meet the nutritional needs of society, both inpatient and outpatient, for the purposes of the body's metabolism, improve health, and improvement of metabolism disorders, within the framework of preventive, curative, rehabilitative and promotive (Health Department, 2005) Based on PP Health Ministry of Republic Indonesia No 1673/Menkes/PER/XII/2005, Nutrition Installation is non structural unit in operational directory and general which providing facility and nutrition services including providing food, nutrition therapy and nutrition counseling. In providing food for patient, Nutrition Installation in Hasan Sadikin Hospital only handling first class, second class, and third class patient but not in Anggrek Pavilion and Parahyangan Pavilion that have outsourced food services. The nutrition needed and types of food for these three classes are handling by nutritionist. For instance, patient who hard to digest regular food will be suggested to consume soft food by nutritionist, and vice versa. For patient, the food services are provided in six types such as breakfast, breakfast-snack, lunch, lunch-snack, diner, extra night food, and extra morning food. 598

2 In providing food services, Nutrition Installation should stock food supply inventory in order to anticipate high variety of patient s food demand. Since there are four types of food supply, Nutrition Installation is required to be able to handle this food supply inventory in good inventory management system, starting from knowing precisely how much to order and when to order food supply. In existing condition, Nutrition Installation in Hasan Sadikin Hospital is experiencing an overstock and stock out problems in formula & enteral food at daily warehouses as Nutrition Installation s main warehouses. The effect of stockout is substitution between items in Formula & Enteral food supply. This subtitution can disturb the item s supply. The effect of overstock is less control of the expired date of the formula & enteral food. There were many items must been wasted due to the expired date. II. BUSINESS ISSUE EXPLORATION A. Conceptual Framework Figure 1 Conceptual Framework Analysis begins with problem identification that occur in Nutrition Installation based on input. After the problem has been found, then there is futher analysis to find the root cause. The root cause analysis by using current reality tree (CRT). The final step from analysis is to find the connection between problems to find the root causes. Ouput begins with solving the main problem in Nutrition Installation and then continue with implementation plan. C. Analysis of Business Situation This section contains analysis and identification of business situation or factors that cause the issue. One of tools that are often used to find out the root of the problems is the cause-effect diagram or fish bone diagram. The business situation analysis is also important to formulate effective solution for the business context as it describes existing situation both controllable and uncontrollable that may affect the choice of business solution. The business process in Nutrition Installation can be group into three main stage. First, food supply planning. Then storing food supply into warehouse and processing and distributing finished food to the patient.from Figure 2 we can see that formula & enteral food supply plans the order every month before order. The planning for Formula & Enteral Food Suplly use historical data and then forecast by Sub Installation Planning Unit. After knowing how much to order, General Administration Team (ADUM) making list to order to the supplier. After 10 days (as lead time) the food supply will be received. And then the food supply will be stored in daily storage by Nutrition Installation. For futher explanation we can see from Figure 2. This research based on conceptual framework above. The conceptual framework consist 3 main parts, such as input, analysis and output. B. Method of Data Collection and Analysis Input starts from field observation and interview. Quantitative data contains consumption data year , Receiving data year dan capacity data of daily warehouse. Meanwhile qualitative data contains interview with The Head of Sub Installation Planning and staff and accuration of food supply data. Figure 2 Business Process of Nutrition Installation 599

3 In order to calculate inventory, we need to determine annual rupiah volume for ABC analysis. We measure the annual demand of each inventory item times the cost per unit. The A class items are those which the annual rupiah volume are highest. Altough A class constitute 15% of the items, they represent 70% untul 80% total rupiah usage. The B class are those medium annual rupiah volume. These items represent about 25% of inventory items and 15%-25% of total value. Those with low annual rupiah volume are C class, which represent 5% of the annual rupiah volume but about 55% of total inventory items (Stock and Lambert, 2001). In Table 1 below, we can see the classification of formula & enteral food supply. Since the A class has high level of importance in inventory planning, from now the final project will analyze the A class category only. The A class category consists Ensure, Vitaplus, Entrasol, Peptisol, Pan Enteral, Diabetasol, Peptamen, Nephrisol, Pediasure and Anlene. Formula & Enteral Table 1 ABC Analysis of Formula & Enteral Food Annual Rupiah Usage Percentage of tot. value Classification Ensure 537,119, A Vitaplus 328,350, A Entrasol 273,487, A Peptisol 257,646, A Pan Enteral 165,984, A Diabetasol 170,355, A Peptamen 115,039, A Nephrisol 135,634, A Pediasure 135,320, A Anlene 97,491, A Heptasol 88,030, B Dancow 87,979, B SGM 1 66,306, B Lactogen 66,241, B Proten 61,920, B Nutrien Opt 60,845, B Glucerna SR 54,744, B Vitalac 1 49,672, B Pediasure comp 44,298, B Neosure 0.97 B 600

4 28,798, Nutrien Yunior 21,760, C SGM LLM 19,032, C Prenan 17,822, C Neomune 17,803, C Pregestimil 16,047, C Vitalac BL 15,176, C SGM BBLR 10,025, C Promina 8,909, C Nestle 6,759, C Enfalac 5,198, C Nan Ha 3,078, C Isomil 2,555, C Prosobee 744, C Nutren Fiber 705, C TOTAL 2,970,884, From observation that has been done, there is one root cause that can cause overstock and stockout on food supply, that is inventory planning based on intuition. This chapter contains a description of business solution that can be applied to solve the problems faced by Nutrition Installation in Hasan Sadikin Hospital in Bandung. As discussed in chapter 2, the overstock and stockout problem happens because the inventory planning in warehouse based on intuition. To prevent inventory planning that based on intuition, we need inventory planning that match with demand characteristic. Figure 3 Root Cause Analysis III. BUSINESS SOLUTION 601

5 Since Formula & Enteral Food is the most expensive compare the other food such as dry food (makanan kering), other food (makanan lain-lain) and fresh food (makanan segar) the the fixed order quantity with safety stock is chosen for inventory planning. Table 3 Order Quantities Figure 4. Root Cause Map, Solution and Positive Effect The demand characteristic can be seen by using historic consumption data. Next step is to forecast to predict the quantity of order. The exponential smoothing method is choosen because the output is the closest to the actual data than other forecast methods and it has the smallest forecast error. By using the appropriate forecast method, the stock or order can be sufficient and can reduce the overstock and stockout effect. Formula & Enteral Order quantity (Q) Ensure 24 Vitaplus 62 Entrasol 111 Peptisol 84 Pan Enteral 26 Diabetasol 66 Peptamen 12 Nephrisol 66 Pediasure 11 Anlene 32 Choosing the reliable supplier also important for Nutrition Installation. The reliable supplier means that supplier can provide the needs of Nutrition Installation. By using the order quantity on Table 3 above, we can make potential saving because the inventory has become more appropriate with the demand. Table 4 Order Quantities Table 2 Comparing Forecast Error Jenis Formula & Enteral Current forecasting Exp. Smoothing Linear Regression MAD Ensure 30,75 14,125 19,02 Vitaplus 38,29 30,63 29,79 Entrasol 52,38 29,58 31,37 Peptisol 52,33 23,25 26,66 Pan Enteral 33,88 6,29 8,99 Diabetasol 35 8,25 20,65 Peptamen 14,79 3,71 4,75 Nephrisol 40,50 12,75 21,23 Pediasure 12,88 6,00 6,04 Anlene 27,50 4,79 4,65 After exponential smoothing has been chosen, the next step is to determine order quantity. Inventory cost current condition Inventory cost simulation Formula & Enteral Potential saving/ year Ensure Vitaplus Entrasol Peptisol Pan Enteral Diabetasol Peptamen Nephrisol Pediasure Anlene Total Rp

6 IV. CONCLUSION AND IMPLEMENTATION PLAN The problems or symptoms in daily warehouse of Nutrition Installation are overstock and stockout. Overstock and stockout happens because of inventory planning based on intuition. Therefore we need to conduct inventory planning that match demand characteristic. First step is to forecast based on historical data. By using historical data we can see the trend of demand. After that compare the forecasting methods to find the most appropriate method. The exponential smoothing is most appropriate because the closest to the actual data and the smallest forecast error. The forecast method can also predict the quantity of the order. With sufficient order, the overstock and stockout can be minimize. Inventory planning use fixed order with safety stock based on formula & enteral food characteristic. Order quantity (Q), reorder point (R), safety stock (SS) and inventory level can be shown on table 5: Formula & Enteral Table 5 Order Quantities Order quantity (Q) Reorder point (R) Safety stock (zσl) Inventori level with simulation Ensure Vitaplus Entrasol Peptisol Pan Enteral Diabetasol Peptamen Nephrisol Pediasure Anlene The implementation plan for forecasting problem is to conduct forecasting training. Forecasting training should be given to planning and warehouse staff. For the timeframe of implementation plan can be seen on Table 6: Table 6 Timeframe of Implementation Plan N o Implementation plan Forecasting training for warehouse & planning staff (PIC: Head of Sub Installation Planning) Observation of demand trend (PIC: Head of Monitoring Unit) Implementation inventory model using fixed order with safety stock. (PIC: Head of Planning Unit) 4 Agustus September Oktober November

7 REFERENCES Ardani and Simatupang / The Indonesian Journal of Business Administration, Vol.1, No.9, 2012: Buchan, J. and Koenigsberg, E Scientific Inventory Management. New York : Prentice-Hall. Chase, Richard B., Jacobs, F. Robert, Aquilano, Nicholas J., Operations Management for Competitive Advantage with Global Cases. New York: McGraw-Hill / Irwin. James, R., Stock and Douglas, M., Lambert Strategic Logistics Management. New York: McGraw-Hill. Simchi-Levi, D., Kaminsky, P. and Simchi-Levi, E Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies. New York: McGraw-Hill. Pedoman Pelayanan Gizi RSUP. Hasan Sadikin Rencana Strategis RSUP Hasan Sadikin